When your business is doing well, it’s only natural to want to build it up further to generate more profits and continue growing your empire. In the construction world, this might be the ability to take on larger scale projects, buy new and improved equipment, and training for your team that would greatly benefit your business against its competitors. But how do you know when you’re ready to take that step forward and make an investment?
The rise of coronavirus in 2020 has greatly affected businesses because consumers are less willing to spend their money than beforehand because understandably, they’re trying to watch what they’re spending. This has caused many businesses to shut down and while it might not have affected the construction industry like it has others, it’s still important to know whether now is the right time to be making an investment. Here’s how to know when you’re ready to make further investments in your construction business.
You’re breaking even
The first thing you should think about is what your profits are looking like. It’s not unusual to not quite break even, but it’s also not a healthy place to be in your business. If your construction business is breaking even, you can begin to think about where you can spend some of your profits to help keep the business income as high as possible. You can use companies like Air Wallex to conduct a break even point analysis, which is a formula you can use to determine your total fixed business costs and the amount of stock you need to sell or income goal you need to hit to cover these business costs completely. Once you’re breaking even, you have more freedom with your business’ money.
The needs and demands rise
Secondly, you need to think about whether the demand for your services is there, and whether it will continue to do so for the foreseeable future. If you’ve got a long list of clients waiting for you, then you can safely say that you’ve got scheduled projects for the near future. However, if clients come and go and you have periods where you’re struggling to find projects, then now might not be the time to make any further investments. That being said, improving elements of your construction business may put you above your competitors, therefore landing you the clients you want for your business. It’s always a good idea to speak to your business’ accountant before making any large purchases to see if the investment is going to eventually pay for itself.
Your team is growing
If the needs and demands are truly there, then there’s a large chance you will have to expand your team – whether that be to complete projects faster, or have your team working on multiple different locations in one go. If your construction business is in that much demand, then you’ll definitely be thinking about bringing more members of staff on board. However, doing this means committing to more pay checks each month, and this is definitely something you need to keep an eye on.
You’ve made a business plan
You may have had your eye on a specialist piece of equipment that would make life much easier on future projects, and you may even have enough profit to pay for it without it making a difference to your business. However, charging in and buying something without a plan isn’t going to do your business any good. Know what you want to achieve with your investment and when you want to achieve it by. This way, you can urge staff members to upsell to clients and make the most out of your purchase.
It’s also worth mentioning that whether you’re planning on making an investment or not, it’s always a good idea to have a business plan in place. Doing this will help you guide your construction business in the right direction, allowing you to manage your team effectively and make the most of the hours they work.
How are your marketing efforts?
While you may have a long list of clients wanting services from you at the moment, there’s nothing to say it’s going to continue that way. You need to take some time to effectively market your business so that as time goes on, more clients sign up for your services. You can do this through social media, a website, and canvassing leaflets and brochures.
So, if you’ve got a positive answer to these questions, then it may just be time to begin making further investments into your business! Good luck!