Property development is a lucrative field with huge potential profits, but that’s only true when you can manage each projectproperly. This is no easy task as it requires knowledge, understanding, experience, connections,and business acumen relevant and specific to the construction business. This post will help if you are looking to reduce unnecessary expenses. Read on to find out how.
Hire Expensive Equipment
To decide whether you are better off hiring or buying, go through the following steps:
Estimate how often you are likely to need the equipment for future projects.
Estimate how many days/hours the equipment will be needed throughout the project’s duration.
Estimate how much it would cost you in total to hire the equipment for the estimated duration.
Estimate how much it would cost you to buy said equipment.
If the construction equipment is not something that you expect to use regularly in other projects, the total cost of rent only needs to be slightly lower than the cost of purchase for you to consider trailer hire or cherry picker hire as the best option.
If the construction equipment can be considered instrumental tomost projects that the property developer usually undertakes, then the cost of rent must be significantly lower than the cost of purchase for the developer to prefer hiring over buying.
Any expensive, construction equipment that qualifies in accordance with the aboveshould be hired. Although it can be tempting to buy items outright, it will land you in unnecessary debt. Given that most construction businesses are founded on giant loans to begin with, the additional repayment plus interest will continue to eat into your profits for a long time to come.
Use Automated Inventory and Supply-Chain Management Software to Minimize Costs
Imagine how much time and energy could be diverted towards other facets of the business if you, your business partner, or someone on your payroll did not have to spend so many hours on inventory and supply chain management every year. Also, software does have the advantage of negating human error, finishing calculations, and presenting estimations much, much faster than the smartest man.
Work with Contractual Employees
It is better to have a crew that you know and trust, rather than hiring one separately for each project. In addition, it is most certainly cheaper. Most contractors usually start out with a permanent skeleton crew and only hire additional employees on a strictly per project/per hour basis. It’s a good strategy to save money when you are still small. If you are only just starting out as a property developer, keep the number of permanent employees to a minimum.
At the same time, do maintain business connections with skilled workers and business owners related to the construction business. For example, you can hire roofers externally for only as long as it takes for them to install the roof on that particular building. Nonetheless, you have now made a professional contact. If they were professional and good at their job, you can call them for future roofing contracts as well.