As a contractor, actively looking for new opportunities and resources to leverage will help you build a resilient business model that drives growth, but it can be challenging to manage these opportunities alongside your business needs. Adopting innovative solutions will also give you an edge when facing potential challenges such as volatile material prices or inflation.
In this article, we’ll explore key steps and strategies for improving your profit margins, expanding your business, and exploring new opportunities with electrification so you can make the most of your electrical contracting business.
Today’s job climate demands that projects must be completed on time and within budget. Meeting these expectations calls for building efficient business processes that lead to consistent results.
Projects can be derailed by poor management and by not accounting for supply prices and other expenses. Do your due diligence and research the pricing of materials and other costs such as shipping, taxes, and mark-up fees.
Are you seeking different suppliers and getting price comparisons? Have you asked for price breaks and bulk pricing? These are practices that can help you stay on track and improve profit margins. Anticipate price increases and try to lock down pricing prior to the market shifting.
Eliminating human error completely might not be a realistic goal, but you can take steps to reduce errors and lessen their impact on your bottom line.
Firstly, staying organized is a simple way of reducing mistakes. Keep a strict account of timelines, orders, budgets, and where items are kept and stored.
Additionally, the right team and systems can ensure your business is organized and can help you stay profitable and relevant. Taking advantage of current technology such as automation is highly recommended when trying to improve efficiency and cut costs.
From reducing errors linked to human data entry to helping you save time on important tasks, automation is a crucial step for reducing costs. In fact, some businesses see a reduction in labor costs of as much as 31% after embracing automation.
You can improve your contractor profit margin by automating these processes:
Build a strong business by providing ongoing training for your staff. Proper EV charger installation training can improve efficiency and project completion times while also reducing mistakes and waste.
Investing in your electricians and high-quality tools can increase your team’s productivity and overall job satisfaction, as well as create career advancement opportunities for your staff, reducing turnover costs within your team.
On a global scale, IT spending could increase by 4.3% in 2023. More businesses are investing in the latest technology solutions to build streamlined processes and expand their capabilities without incurring additional costs. Tech solutions can unlock unique value for electrical contractors, and implementation is easier than ever with developers focusing on creating user-friendly platforms.
Adopting a project management tool has several benefits:
You can improve your contractor profit margin by building a business model that incorporates a wider range of assets with the potential to create long-term value. This approach will make you more resilient and put you in a unique position to take advantage of the new business opportunities created by electrification.
New customer acquisition is always more costly than repeat or recurring business from your existing customer base. As a contractor, you can build a loyal base of long-term customers by offering warranties or maintenance plans.
However, education is often a barrier to decision-making for those considering electrification projects.
Once you have established trust with your customer base, you can start delivering personalized recommendations and educational material to help guide your customers on their electrification journey.
You can connect customers with incentives offered at the state level or through utility providers to help offset the initial cost of the project or show long-term projections to demonstrate how the project will help them save on energy.
From tools to equipment or supplies, quality matters when building a business. Volatile pricing can make it tempting to cut corners and seek affordable options, but you can increase the value and longevity of your services by investing in quality materials, tools, and training. Plus, using quality supplies can prevent costly repairs covered by your warranty.
Your partnerships can be a valuable asset. With EV sales up by more than 60% in early 2023 compared to a year ago, you can improve your EV profit margins by partnering with local dealerships or automakers. Besides increasing your expertise and adding further credibility to your reputation as a reliable and highly skilled electrician, these partnerships can also provide access to quality leads for at-home EV charging installation projects.
You should also consider establishing partnerships with suppliers and professional organizations to gain access to exclusive deals and opportunities, new business avenues, and future referrals based on your reputation and previous work.
With the price of electrical conduits rising by 12% in 2023, it’s no surprise that volatile material pricing is affecting your contractor profit margin. Updating your acquisition strategy can help manage these costs.
Maverick spending, also called rogue spending, is a detrimental practice that hurts profits and NOI. This is when employees (knowingly or unknowingly) purchase supplies from unapproved sources and outside the parameters of your company’s policies.
You can put an end to this practice by developing a clear purchasing policy, adopting a centralized purchasing system, and creating controls to ensure authorized employees are ordering from approved suppliers.
Supply prices can cut into your overall profit margin. A good way to improve profit margins is to save money on supplies. This requires that you research prices and work with the best supplier network to ensure the lowest and best pricing available.
Negotiating the best price and terms with suppliers should be a top priority. When engaging suppliers and entering into contracts, use this to your advantage to lock in pricing if possible and look to long-term deals to bolster your partnerships.
You know who your preferred suppliers are – the ones you go back to repeatedly because they come through for you. The more you spend directly with a specific supplier, the better leverage you have when renegotiating a contract. You can show how much you have spent with them and use this as a bargaining chip.
You can insulate your business from price fluctuations by purchasing surplus materials when prices are low. It might also be easier to negotiate a discounted price if you’re placing a large order. By strategically considering future projects and analyzing your previous needs, you can utilize technology to determine and predict your material needs for upcoming projects.
This will allow you to better plan for your large purchases and ensure you are well-stocked to support existing and future projects.
As the EV charging installation space expands, partnering with the right team to help you grow into this emerging space is imperative. Qmerit’s Certified Solutions Partner (CSP) program is a great way to position your electrical contracting business for growth and success. It offers a slew of opportunities to learn new technology and provides training and coaching to get you started.
As the leading energy transition solutions provider and most trusted network of certified EV charger installers in North America, Qmerit can help you enjoy new training and certification opportunities to prepare your business for the future of electrification, unlock business services to save you time and money, and support your growth as an electrical contracting company and licensed electrician.
The CSP program also offers access to a network of pre-qualified customers who are ready to pay for installation services. Once you join the network, you can serve new customers and gain repeat business through maintenance agreements that will help your profits grow. And thanks to Qmerit’s strategic partnerships, you’ll also have access to a purchasing programs with deep discounts on supplies and materials, direct opportunities with leading automakers and national EV charging networks, local businesses, and have the opportunity to expand your customer-base with new residential and commercial projects alike.
For more information on how Qmerit’s CSP program can help you build your business for the future and mximize your profit margins, contact Qmerit today!