How to Make Money as a Contractor (25 Best Ways & Tips)

If you want to know how to make money as a Contractor, you will find this article really helpful.

It explains how it works and provides 25 best ways and tips to help you.

 

Importance

On the ocean, it is the captain.

In a school, it is the principal.

In a country, it is the president or prime minister.

In a company, it is the CEO or Executive Officer.

In each of these areas and all areas of life, there is that one position or leadership role in which the “buck stops” or the ultimate command or responsibility of the particular area is theirs.

In the world of construction, it is no different, and that one ultimate role of responsibility is the general contractor.

His or her role is to oversee the entire construction project, ensure that the job is being performed according to the industry standards, that the contract with the customer is being followed, and profitability is realized.

Let us, therefore, open up the toolbox of the contractor and see ways that the contractor can make.

 

25 Best Ways & Tips to Help You Make Money as a Contractor

 

1. Know all about being a Contractor

There are many levels to the position of being a contractor.

Specifically, there are subcontractors who work on a building project but work under the direction of the overall contractor as it relates to providing their particular area of service.

For example, the installation of the HVAC system (heating. Ventilation. and air conditioning) can be subcontracted out to a local firm that specializes in this service.

Also, there are general contractors whose role is to hire and manage crews of sub-contractors who do most of the work.

 

2. Know How to Become a Contractor

Becoming a certified licensed contractor requires the involvement and achievement of a number of actionable items.

Some of those actions include:

• The obtaining of a license (some states may not require it)
• Considerable experience
• Understanding of the construction business
• Understanding of the various construction processes
• Etc.

The licensing process involves the understanding of the construction business which is revealed when the individual takes a variety of tests that are designed to evaluate their knowledge of construction regulations construction terms and techniques, safety issues, and more.

 

3. Know What a Contractor Does

The role of the general contractor is to involve themselves in a number of areas, roles, and responsibilities.

Some of those areas include:

• Work with clients to formulate a workable plan
• The draw of the budget and timeline
• Apply for the needed permits
• Purchase of materials and needed equipment
• Provide direction and hire subcontractors
• Meet with building inspectors

 

4. Be Selective

As a contractor, you may get a significant number of opportunities to submit a bid for construction projects.

This may or may not be a good thing and it is important that before spending a considerable amount of time on understanding the project, going through the formulation of a budget, and being involved with the bidding process it is important to know whether this is a good fit for all involved.

Therefore, before going through the process, determine whether this is a good fit for your skill and experience, whether you have the capacity, and whether you can keep within the requirements of getting the job done.

 

5. Right Team

Another important factor in making sure that you maximize your time and effort in making money (time is money ) you want to make sure that you have the right construction team in place.

The construction team is comprised of your suppliers, subcontractors that you work with, vendors, etc.

Having the right professional and qualified people doing the appropriate jobs in an efficient manner goes a long way in maximizing profits.

 

6. Network

An integral strategy in having the opportunity to bid on projects is by being involved in your community.

This involvement in your community is known as networking.

It is important that you are out in the community representing your company so that if the opportunity presents itself as it relates to a construction job, you and your company will come to mind.

 

7. Word-of-mouth

Another important aspect of obtaining opportunities to bid on construction jobs and marketing your company is through the power of word-of-mouth referrals.

For example, if you professionally and efficiently worked on a construction project and everyone was satisfied the word will get out about the quality of work you did as a contractor and will earn you a referral to others who need your services.

This type of marketing is powerful in that it is unsolicited and costs you nothing as far as getting your branding out there.

 

8. Bonding

A requirement that may be imposed upon you as a contractor is the process of holding a construction bond or a licensed bond in order to legally operate in the geographical area in which you work as well as the state.

These bonds are known as surety bonds and there is a related price tag with them.

In order to reduce the premiums on these bonds, there are a few actions that can be taken.

Those actions include:

• Working on your own personal credit
• Presenting yourself as a reasonable risk
• Have your financial documents in order
• Keeping claims at a minimum

All of these actions can combine together to keep your surety bond cost down and subsequently keep more money in your pocket.

 

9. Contractors License

Some states do not require a contractor to have a license.

However, it may be beneficial to make the application and obtain your license because a licensed contractor will be more likely to be hired than a non-licensed contractor.

A potential client or customer is more likely to hire a licensed contractor who has gone through the proper protocol by applying with the state, passing the various exams, and obtaining their license.

 

10. Minimize Waste

As a contractor, it is important to purchase close to the exact amount of supplies that are needed to complete a construction job.

The estimates for the materials needed should not be a guess or an approximation.

It is important therefore to calculate and verify measurements so that the materials that are purchased are just the right amount and this will exclude waste that sometimes is experienced when too much material is purchased for a job.

 

11. Invest in Business

In order to scale or grow the business, a contractor fully understands that the investment in themselves, their workers, and the company itself needs to occur.

Consequently, in order to earn more money as a contractor, it is important to have a strategy in place in which a percentage of the profits are put back as an investment into all of the assets of the company.

 

12. Think Economically

With the rising cost of materials and other associated items in the construction industry, it is important to think economically.

This is especially true as it relates to the cost of fuel and the use of equipment that uses diesel or gasoline.

Therefore, where possible, it is important to minimize trips by workers for supplies or transportation to and from job sites.

It goes without saying that the use of the vehicles should be maximized to conserve the use of fuel and help towards the savings of money which affects the bottom line.

 

13. Bidding

A particular area of the contractor’s job that can be helpful in making money as a contractor is to refine your bidding process.

Bidding on a project is a fine line if you bid too high you will put yourself out of the competition or if you bid too low you will not realize the prophet that you should.

Therefore, it is important to select the right projects and only those that you know will turn a profit.

Also, when one project is done it is important to gather the team together to see how close the actual cost of the project was in relation to the bid.

Also See: How to Make Money Owning a Semi Truck.

 

14. Challenge Your Crew

Having the right crew at the job site is critical.

An important consideration is not only having the right crew at the job site but maintaining their engagement is equally important.

It is important as a contractor and as the leader that you provide a safe and beneficial environment to make sure that the workers are satisfied with the job that they are doing.

This also means having the right tools for the right jobs that function properly.

You could also maintain the morale of the workers by occasionally providing lunch, time off for family emergencies, hosting get-togethers at special times of the year, etc.

Also, paying overtime can eat into your profit.

The realization of the negative aspect of overtime is not only in the extra pay but it is been demonstrated that workers that are heavily involved in overtime hours are less productive at the job.

 

15. Lower Price

Sometimes the temptation to lower the price or to reduce your initial bid to gain a construction job becomes a looming temptation.

It is important not to give in to this temptation to reduce your bid provided to the potential customer.

You need to recognize that this could be an act of desperation in wanting to get work but in the long run, will make you lose money.

This action can easily turn into a habit.

It is therefore important not to lower your bid which will sacrifice your profit.

 

16. Care of Tools

At a construction site the most important aspect of getting the job at hand completed, by skilled workers, is by having the right tools for the task that is presented.

It is paramount that in order for a contractor to maximize their earnings, the tools are properly maintained and upkeep is provided.

Through a properly scheduled maintenance program, the life of the tools and the equipment will be maximized which, in the long term, will save the contractor money.

 

17. Consultant

An opportunity that may present itself for a contractor to earn money is by taking on the role of a consultant.

Construction companies may have a specific job that is in the process of being completed for a client.

A certain aspect of the job may benefit from your experience and perspective and therefore you can be utilized as a consultant and earn additional money.

 

18. Give Back to Community

As a contractor, you are a critical member of the community because of your role in increasing the infrastructure of the area.

Because you are an active participant in the community it is also good to give back.

This giving back to the community can be the support of various not-for-profits when these entities ask for financial donations or sponsorships as it relates to special events such as a golf tournament.

By investing in your community and giving back, not only are you adding to the quality of life in the area but are demonstrating in a practical way your concern for others.

In addition to this being a genuine concern, it also will have the impact of others taking notice of your position and the company being involved which can translate into added business.

 

19. Training Courses

As with anything in life, there is continually evolving knowledge and knowledge that can be shared.

To maximize your earnings potential it is important to stay current with all of these potential changes and activities that occur in the construction business.

This can be accomplished by investing in yourself and taking online courses that are designed to keep you up to date as it relates to the construction industry.

 

20. Build Trust

Building trust will go a long way in making you successful and achieving your financial goals.

There is nothing more valuable than the integrity of your name which reflects who you are and all that you bring to the construction table.

It is important that your name is synonymous with quality work, at fair prices, and work that exceeds expectations.

All of this will go into building trust which can equate to more construction projects.

 

21. Understanding Finances

As you are well aware, the construction business is more than just the creation of buildings and various projects.

The other important component of any business finances.

The basic financial tool as it relates to any transactions is the budget.

The budget is a reflection of the anticipated income versus the anticipated expenses.

Of course in the construction business it is far more complicated than that but being successful financially is the same basic key denominator as being under budget being good and over budget being bad.

Therefore, it is paramount that you as a contractor have a good working knowledge of finances so that all of your hard work, knowledge, and experience will pay off.

 

22. Customer Service

Being a contractor can be a high-stress job.

This is due to the reality that you are pressured to complete a project within a certain time frame and in order to maximize profitability, stay within the budgeted amounts.

With all that being said, the possibility of the stress turning into negative interactions with others and especially the customer may be a possibility.

As a contractor, it is important that your demeanor and emotions stay in check and that customer service is always provided optimally.

 

23. Technology

Technology can be intimidating but also can be a critical cost savings component of activity that occurs at the construction site.

The proper investment and use of technology can, in the long run, save you as contractor money.

One such example of technology that can be utilized today at a construction site is the use of a drone.

A drone can help to monitor the activity of the site, keep track of inventory, provide information through pictures to you and your client, manage timelines and benchmarks, etc.

 

24. Teaching

Given the extent of your knowledge and experience, it seems as if these two dynamics could be coupled together to provide you with additional income by teaching about the occupation of a contractor.

You could work with a local community college, trade center, etc, and offer to teach a curriculum or variety of workshops on the building industry and the significant role that a contractor exerts.

Possible topics of instruction could include:

• Bidding process
• Hiring
• Use of subcontractors
• Future of the industry,
• Etc

 

25. Switch to the Indoors

In the construction business, depending on the location of your business, outdoor construction can be seasonal.

Therefore, as a contractor, it is important to have a plan of action in place to realize revenue during the off-season as it relates to construction.

One of the options is to pursue indoor or interior remodeling and this can be accomplished by just shifting your attention to interior projects.

Some of those projects could include flooring, remodeling, cabinetry, painting, etc.

Another option for managing the seasons is to utilize your equipment in the area of snow removal.

You can use various plows or blades that can attach to the front of your vehicle for the snow to be removed from roadways, parking lots, etc.

 

26. Know Your Costs

As a contractor, it is important for you to know all of the costs associated with your bid on the project but also incorporate the overhead costs as well.

The costs associated with bidding on a project include:

• Labor
• Supplies
• Equipment rental costs
• Bonding premiums
• Fuel
• Permits
• Materials
• And more

Additionally, sometimes the economy can be volatile and it is important to reflect the possibilities of the costs of fuel and supplies rising and base your bid on that aspect of the money requirements to complete the job as well.

Some jobs require that the employees be paid a particular wage, prevailing wage, especially if the construction job is federally or is associated with the state.

It is important to understand the wage structure for certain jobs and bid accordingly.

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Personal Story

In 2005 a significant hurricane, Katrina, devastated the city of New Orleans and the surrounding area.

This natural disaster then triggered several other events that eventually would spill over into my professional life where I worked a half a country away.

Long story short, the hurricane triggered a philanthropic action of a local businessman who donated a huge 48,000 ft.² building to our not-for-profit.

The plan was to get the building and transform it into a homeless shelter and transitional living center.

The process began and during the first phase, I became involved in the business aspect of this not-for-profit and found this construction project front and center on my list of things to be involved with.

In working with a general contractor the building was transformed from a dark and damp warehouse to a secure shelter for the homeless.

The following year, we received additional grant funding and began to look at developing the other half of the 48,000 square-foot facility.

It involved grants at the state and federal level, local monies as well and support from the community along with the utilization of our reserves.

All that to say is that the hiring of a general contractor, going through the bidding process, and volumes of paperwork as it related to billings, invoices, and change orders was an extensive process that the one-time experience was enough for me.

However, the value of the hard work invested by all paid off as a 140-bed shelter emerged from the various piles of rubble, and lives were touched and transformed.

 

FAQs

 

What is the Most Expensive Activity at a Construction Site?

The most expensive activities performed at a construction site are:

• Litigation when deadlines are not met
• Staffing
• Cost for added space and structures.

 

Are There Formal Education Requirements to Become a Contractor?

Although an individual can become a contractor given their experience coupled with a high school diploma, most employers want an individual who has a bachelor’s degree in construction management.

 

You Can Do It

There are many hard hats that a contractor needs to wear.

Those roles include being the overall supervisor of the construction workers, managing the activities at the construction site, working with the customer, and overall responsibility for the construction bid.

Your experience and education will help you to succeed and earn the money that you deserve.

 

Conclusion

The construction business is a balancing act of providing a quality service in the construction of a project with the balance is getting the job done in a quality Manner and yet still endeavoring to gain a profit.

a critical role that plays a major factor in making this balance to be maintained is the role of the contractor.

A good contractor is worth their weight in concrete as they are able to maintain this balance and keep all entities satisfied as well as maintaining profitability.