October 14, 2021
How to Improve Profit Margins as an Electrical Contractor
4 Min. Read
As supply shortages become unfortunately common in the economy, controlling spending becomes a bigger part of business management. Electrical contractors are already under pressure due to certain material shortages such as steel and copper, and the trend isn’t looking up. However, there are proven ways to save money on electrical equipment that should help you improve profit margins and stock up before certain supplies become hard to find.
Plan with efficiency
Today’s job climate demands that you complete projects on time and within budget. Understanding that there are supply shortages and long lead times means that as a contractor, you need to be conscious of the complete project lifecycle, from A to Z, and be sure to factor in all ancillary issues.
Project costs and anticipated expenses
Projects can be derailed by poor management and by not accounting for supply prices and other expenses. Do your due diligence and research pricing of materials and other costs such as shipping, taxes and mark-up fees.
Are you seeking different suppliers and getting price comparisons? Have you asked for price breaks and bulk pricing? These are practices that can help you stay on track and improve profit margins. Anticipate price increases and try to lock down pricing prior to the market shifting.
Avoid misplacement and human error
Humans make mistakes. It is inevitable. But you can take measures to reduce human errors so it does not cost you money and time. Firstly, staying organized is a simple way of reducing mistakes. Keep a strict account of timelines, orders, budgets, and where items are kept and stored.
Additionally, the right team and systems can ensure your business is organized and can help you stay profitable and relevant. Taking advantage of current technology is a no-brainer when trying to improve efficiency and cut costs.
Use software solutions
There is no excuse to not embrace technology. Indeed, there is an abundance of software solutions that can help businesses save time and money and improve efficiencies within their operations.
Nonetheless, the amount of software and tech tools on the market can be overwhelming and daunting when trying to decide what is best for your business. A good way to decide what system is the right one is its ease of use and implementation.
Also, look for solutions that enable you to do the following:
Identify maverick spending and supply gaps
Maverick spending, also referred to as rogue spending, is a detrimental practice that hurts profits and NOI. This is when employees (knowingly or unknowingly) purchase supplies from unapproved sources and outside the parameters of your company’s policies. It is usually done out of convenience or laziness.
Once you have identified that your teams are purchasing from unapproved suppliers, explain that this puts your company at risk and costs you more money. Then you can install systems to eliminate maverick spending.
Research prices and vet suppliers
Supply prices can cut into your overall profit margin. A good way to improve profit margins is to save money on supplies. This requires that you research prices and work with the best supplier network to ensure the lowest and best pricing available. Fortunately, Qmerit has a partnership with Raiven that can help you vet potential suppliers and establish relationships built on reliability, efficiency and cost savings.
Leverage supplier contracts
Negotiating the best price and terms with suppliers should be a top priority. When engaging suppliers and entering into contracts, use this to your advantage to lock in pricing if possible and look to long-term deals to bolster your partnerships.
Direct spending to your preferred suppliers to use as a renegotiation opportunity
You know who your preferred suppliers are – the ones you go back to repeatedly because they come through for you. The more you spend directly with a specific supplier, the better leverage you have when renegotiating a contract. You can show how much you have spent with them and use this as a bargaining chip.
Purchase surplus materials in advance
As you look ahead, try to purchase supplies that you routinely use in advance so that when shortages occur, you already have stock to complete your projects. This will enhance your reputation in the marketplace.
As you work to build and grow your business, turn to Qmerit as a partner for your success.
Become a Qmerit Certified Solutions Partner to improve profit margins
As the EV charging installation space expands, partnering with the right team to help you grow into this emerging space is imperative. Qmerit’s Certified Solutions Partner (CSP) program is a great way to position your electrical contracting business for growth and success. It offers a slew of opportunities to learn new technology and provides training and coaching to get you started.
Business coaching and recurring contract possibilities
Qmerit can keep you current with the latest technology in the EV installation space and offer business coaching to ensure that your company is certified and qualified. The CSP program also offers access to a network of pre-qualified customers who are ready to pay for installation services. Once you join the network, you can serve new customers and gain repeat business through maintenance agreements that will help your profits grow.
Access to special offers on electrical supplies for EV installations
With Qmerit’s partnership with Raiven, you can also gain access to discounts and special offers on the supplies that you need for EV installations. Ultimately, you can take advantage of training, coaching, access to customers and discounts on supplies to help you expand your business and improve profit margins.
For more information on how Qmerit’s CSP program can help you, reach out today.
