What’s in this edition:
- News/Publications to follow
- Financial considerations for your Flooring Contractor business plan
- Industry metrics for guidelines
Public Information to Follow
- Associated Builders and Contractors
- Leading Indicator of Remodeling Activity
- Flooring Covering News
- FMI
Financial Considerations for your Business Plan
Profit Drivers
Winning New Business: Flooring contractors need to keep their workers busy and their equipment running, so they’re always looking for new jobs. They get most of their new work from general contractors who are building new homes or remodeling old ones. To build relationships with general contractors, flooring contractors need to do a great job and finish their projects on time. They can also get referrals from satisfied homeowners.
Accurate Cost Estimation: Flooring contractors have to bid on jobs to get new work. They don’t want to price themselves too low, but they also don’t want to price themselves out of the running. They have to find a balance between being competitive and making sure they’ll make a profit.
Cash Management Challenges
Seasonal Demand. Construction activity slows down in the winter in areas with cold weather, and the number of new construction starts can fluctuate. This can lead to temporary cash shortfalls for flooring contractors, who have to keep paying their workers even when there’s less work.
Delays in Collecting from General Contractors. When flooring contractors work on new construction, they usually work for a general contractor who contracts with the building owner. The general contractor doesn’t pay the flooring contractor until they’re paid by the building owner. This can lead to payment delays for flooring contractors, even if they’ve done their work on time.
Potential equipment purchases could include:
- Pneumatic Hardwood Cutter: $1,000 – $1,500 Cuts flooring planks up to 9 inches wide from hardwood, engineered wood, laminate, and LVT.
- Van/Truck: $25k – $100k Some need to be outfitted with custom setups to fit all gear and tools safely.
- Wood Floor Sander: $2,000 – $6,000 Disc sander for finishing and renovating solid and engineered wood floors, cork and stained floors. Includes sensor-monitored dust extractor and filtration system.
- Carpet Binder: $3,000 – $5,000 Bobbinless portable binder for binding heavy-duty carpet backing and area rugs.
- Carpet Stretcher: $300 – $700 Tool for stretching carpet to eliminate buckling and match patterns.
Recent Industry Metrics (Companies <$5M revenue)
Highlights from this vertical analysis and financial ratios:
- Tighter gross margin compared to other contracting services.
- Inventory on hand reduced compared to pre-pandemic.
- Companies increased long-term debt as a percentage of total liabilities.
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