Visit Us

Construction

Managing Expenses for Your Construction Business in the Winter

In some parts of the country, typical construction work tends to drop off in the fall and not pick up again until the spring. This makes it tough for construction firms that still need to pay overhead and provide an income for employees and owners. How can companies manage to stretch six to nine months of peak income over an entire year? Check out these tested tactics from small construction companies to manage expenses during the offseason.

Diversify income streams

In some cases, cutting expenses too drastically may hamper your growth and ability to gear up for the spring and summer. If you have to let key employees go, you may have trouble hiring them again later because they will have found more predictable jobs. When you can’t reduce expenses, you may have to earn more income.

Some construction companies have managed to keep employing their people and their resources by offering fall and winter services. Depending upon the equipment a construction company already has, they might offer to remove snow, clean roofs or even string up holiday lights. Instead of only performing construction, they may diversify into inside remodeling work.

It’s prudent to test out new services that you plan to market to make sure you can meet a demand with resources that you have or could easily obtain. While you have a chance to grow your business, you also need to be wary of overextending yourself in an unfamiliar line of work.

Get help with cash flow management

Of course, it’s important to consider slow seasons when you budget during peak seasons. When your company is fairly new, you may not have had the chance to bank many assets that you can draw on during lean times. Besides, even if you don’t have many paying customers during the winter, you may find that you still have a lot of work to do in order to prepare for the next peak in demand. For instance, you may delay routine maintenance, tax planning and other tasks until the winter.

You may need a small business loan to help you survive your first few slow seasons. These kinds of loans can help you keep your equipment and staff in good shape. If your fairly new construction company hasn’t had time to establish much business credit, you might consider an online lender. You just need to demonstrate that you run a legitimate business to be considered for a loan.

Of course, you need to have a plan in place to repay your loan. Just consider ways that access to extra cash could help you make larger profits to begin laying out your credit management plan. Your prudent use of that first line of credit can open more doors for financing in the future too.

Consider a flexible workforce

You may rely upon permanent employees for some skilled tasks. As your business grows, you will probably find that your good employees are one of your best assets. On the other hand, you might find that a contract or temporary worker can provide you with many services without requiring you to spend as much money on overhead. Since few small business owners enjoy laying off people during the slow season, your flexible crew can free you up from that concern too.

For instance, instead of hiring a full-time receptionist, you may benefit from employing a virtual assistant who can monitor email and phone messages, respond to some and direct the important ones to your attention. You may find students with good work ethics who can handle some of the more routine summertime work and be happy to leave for school in the fall. These days, freelancers and temporary workers provide labor for many businesses with a lower overhead cost.

Weigh your options of buying or leasing equipment

In the long run, it might be cheaper to buy than lease your equipment. With some kinds of equipment, it’s better to own it because the employees will be familiar with it and your business can control maintenance. In other cases, you may profit by opting to make lease payments instead of buying.

If you spend too much of your reserves on equipment, you could lack funds to pay salaries and overhead if your income drops. This can be particularly true if you only need the equipment for a handful of months during an entire year. In December, you will still be holding onto depreciating equipment that you can’t even use.

Managing expenses during slow seasons requires planning

Basically, you can try to trim expenses, increase income or do a bit of both. To tide you over in case of emergencies or when your company is new, you might consider borrowing the money that will help you sustain during the winter and grow in the summer. In any case, good expense management habits seldom occur by accident, so you will need to develop a workable plan.

Want to learn more about the Kabbage process? Check out these helpful links:

To receive more small business resources, sign up for our newsletter!

email

Kabbage Team

Kabbage is here not only to provide access to the small business funding you need, but to also help you grow your business through free marketing tips, webinars, tools and more. Is there something you'd like us to cover or want to get your small business featured on our blog? Send us a note at content@kabbage.com.