Construction project budgets are incredibly detailed. They must be. From hard costs like the equipment you use to the soft costs like legal fees, every penny is allocated for a specific use. But have you done the same for your construction business?
Start with the business plan
What is your business plan? A business plan helps steer your company in the right direction and it can help steer your budget, too. A good way to start is by pinpointing your services. Find out what your services are, what they cost, who you might need to hire, etc., and go from there.
Do your research
Your business plan should include a market analysis. You’ll want to conduct research into the current market and forecast your financial needs. This, paired with your business plan, will allow you to have a frame of reference for what your budget may look like.
This is when you budget for specific line items. You’ll have a list of direct costs, like paying your workers and maintaining your equipment, but you will also have fixed costs, like your monthly rent or marketing budget. You’ve included the price of nails for your most recent commercial building project, but have you accounted for the cost of pens in your office? Variable costs like office supplies or travel to and from sites should be accounted for, too.
Don’t forget revisions
Costs change over time, but there are standards for certain materials or wages, for example. After you’ve conducted your research, find any budgeted items that seem off compared to the market average. Find why they differ and see what you can do to save costs.
Create a calendar
Like on any construction project, a schedule can help you manage your costs. If you have an idea of when certain costs or profits occur, you’ll be able to track your budget more precisely. Keeping up with this schedule will help you decide what tasks need to be tackled before others and will help prevent overspending.
Track your budget
Take time to regularly review your budget. Find out how your costs are trending over a couple of months. You can adjust the budget as needed, which will help you stay on track even when things are changing and will help next year’s budgeting process.
Invest in the right technology
Budgeting can feel like a daunting task. If you’re someone who doesn’t work well with numbers, it can be confusing and frustrating, especially when dealing with taxes and variable costs. One way to help relieve this pain is by investing in the right technology. Project management software is likely something you’ve already invested in, and you should do the same for your business. Business management software helps you build and track your budget.
Find the sweet spot
Your budget will change as your business grows. Remember to keep in mind that no two companies are alike. There are many types of software, so don’t be afraid to shop for the right tech for you. A small business may not need all the “bells and whistles” in a software package that could, on the other hand, be the perfect fit for larger companies. Find what fits your needs to help keep your budget and business healthy and thriving.
