Construction Businesses: When Frugality Goes Too Far

frugal construction businesses bootstrap business

Frugality is all well and good-- desirable, in fact, in the course of running a business. The entire point of running a business is to earn a profit, increase your margins, and grow your revenue over time. 

Frugality can go a long way to helping to achieve that, especially in the construction industry, where profit margins are already notoriously low. Operation costs can skyrocket and liability is high.

Construction And Frugality Don't Always Mix

However, construction companies can find that they take their idea of frugality a step too far. Corners are cut in an effort to reduce costs and improve those terrible profit margins. Sometimes, these cost-cutting measures will be successful, and they are able to pass undetected by clients. Unfortunately, this is not always the case-- and the “money saving” frugality actually ends up costing more in the long run. 

Here’s a few examples of frugality gone wrong that construction business bosses would do well to keep in mind. 

Reducing The Amount Of Machinery On Site 

This sounds like a good idea. Machinery is expensive to run and maintain, and if you can get by with one less digger or lift, then you might as well see if you can make it happen. If you run behind due to the lack of construction machinery, you’ll just talk it through with the client. What could possibly go wrong? 

A lot. Construction machinery is expensive because it saves time, hassle, and is genuinely required to complete a construction project to a high standard. So you lose out in productivity, and you might also sour a relationship with a client. If you’re not careful, you’ll find yourself halfway through an ever-more delayed project, having to visit High Reach for more information on obtaining a lift or contacting an independent company to licence a digger, just so you can complete a job. If this becomes necessary, the chances of that customer hiring you again are zero. 

You will also want to ensure that you have the best versatile equipment to save space and money. For example, it's recommended that you invest in the best portable drill press along with other multipurpose tools.

Limiting Your Construction Workforce 

Salaries are expensive, especially in the construction industry, and they can feel like a real burden to your profit margin. It’s therefore extremely tempting to cut your staff down to the bare bones for a project, in a drive to improve profits without impacting productivity. 

Here’s the thing, though: you will impact productivity. If you plan a project and acknowledge it will take at least 20 people to complete the work, then it will take 20 people. You can’t expect to turn up with a crew of 16 and imagine the project can still progress as planned. 

If you try to do this, then you find yourself scrambling to try and cover the shortfall. As with the machinery issue, you might find you have to bring in temporary replacements-- more expensive laborers hired on a day-rate that ultimately cost more than salaried employees. You’ll also, once again, wreck your relationship with the client. 

Build A Better Construction Company

If you want to be truly frugal with your construction business, then look at your materials and supply line. These are where the savings can be made. Cutting the actual service you provide is not the answer; in fact, it will cause more hassle -- and likely cost more money -- than it will save. Look to save money on your construction supplies or administration costs, leaving your crew and machinery requirements as they need to be.

I hope you enjoyed this article about how to keep your construction business profitable without cutting too many corners with overdue frugality.

Interested in more articles about building better business in the construction industry?

Read My Blog Posts:

- Tips To Launch Your Construction Business 

- How To Build Your Business From The Ground Up

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