What’s in this edition:
- News/Publications to follow
- Financial considerations for your catering business plan
- Industry metrics for guidelines
Public Information to Follow
Financial Considerations for your Business Plan
Seasonal cash flow
Concrete and masonry contractors face a lot of ups and downs in their business, especially in areas with harsh winters or scorching summers. This is because construction activity and the kind of work they do with concrete are heavily influenced by the seasons. When it’s extremely hot or cold, it becomes difficult for concrete to set properly and the end result may not be up to par. To cope with these fluctuations, contractors often hire part-time workers to handle the busy periods.
Job profitability
Concrete and masonry contractors have a tough time making sure their jobs bring in enough profit. They have to be really careful when estimating how much everything will cost, like the labor and materials, while also accounting for any potential waste. But here’s the tricky part: they can’t be too cautious in their cost estimates because they’re competing with other contractors based on price. Sometimes they might even end up underpricing their bids.
Potential equipment purchases could include:
- Portable Mortar Mixer: $1,000 – $2,500 Compact and versatile, a portable mortar mixer efficiently blends mortar and other materials on-site, offering convenience and flexibility for construction projects.
- Towable Concrete Mixer: $2,000 – $4,000 A towable concrete mixer allows for easy transportation and on-site mixing of concrete, providing a convenient and efficient solution for construction projects.
- Concrete Power Screed: $1,500 – $2,200 A concrete power screed is a motorized tool that quickly and evenly levels and smooths freshly poured concrete, improving surface flatness and reducing manual labor.
- Concrete Screed Laser: $200 – $400 per pair A concrete screed laser is a precision leveling tool that utilizes laser technology to ensure accurate and consistent leveling of concrete surfaces, enhancing efficiency and achieving precise flatness in construction projects.
- Power Trowel: $2,000 – $2,500 A power trowel is a motorized equipment used in concrete finishing that smooths and flattens the surface with rotating blades, achieving a polished and professional appearance.
Profit drivers
- Maximizing bid-hit ratio – Contractors aim to increase their bid-hit ratio by establishing strong relationships with general contractors, maintaining a reputation for high-quality work and punctual delivery, and strategically pricing jobs to secure more projects while minimizing marketing costs.
- Managing Margins – Concrete and masonry contractors rely on accurate estimation of materials and labor, balancing competitiveness and profitability, taking into account contingencies while avoiding excessive padding, often utilizing bid estimation software but also drawing on experience and job metrics for pricing bids.
- Efficiently Scheduling And Completing Jobs – Upon winning a bid, concrete and masonry contractors must effectively schedule workers and material deliveries across multiple projects to ensure timely completion, minimize waste, and prevent idle time and unnecessary costs for equipment and resources.
Recent Industry Metrics (Companies <$5M revenue)
Highlights from this vertical analysis and financial ratios:
- Days receivables declined 31.9% from pre-pandemic.
- Benefits-pension costs nearly doubled as a percentage of revenue post pandemic.
- Based on the decreased number of firms in this analysis, the pandemic removed a large portion of inefficient contractors from the market which is a sign of opportunity for existing and new entrants.
If you liked this, subscribe to my newsletter below!
For more information on building financial models see here.
Please contact me here if you found this useful or want more information.