Any successful business owner knows how important cash flow is to their business and how variances can disrupt these figures. As builders your job costs can ultimately grow or destroy your small business. It’s vital you keep on top of each project and minimise variances for any chance of survival.
How do variances add up?
There are a number of reasons that can cause your variances to scale out of control. While these aspects may be hard to control, they’re not something you can afford to look beyond or sweep under a rug. Variances can occur if:
- You’re competing on price – if you choose to get into a price war with another builder in an effort to get the sale, chances are your variances during construction are going to add up. By reducing the initial quote or fixed-price contract you will be forced to cut costs on an area of the project that will eventually catch up to you. There is no point in reducing costs if you cannot actually afford to do so. If you feel the need to compete on price it may be time to review your sales strategy.
- Custom designs – as a small business owner it is likely you are going to be forced to build a completely customised design. This can cause variances to increase as issues can arise when you’re unfamiliar with plans.
- Estimating – one of the biggest causes of variances is inefficient estimating. If you or your estimator are over or under costing on a regular basis your business will suffer the consequences. By creating processes to control your job costs you can minimise variances, reduce your build times and ultimately increase your profits and customer satisfaction.
- Work flow management – poor workflow management will result in an unstable timeline throughout the process of each build. If you are unable to effectively manage your timeframes your products may get delivered before you need them. If goods are on site before they’re actually needed, thieves suddenly have an opportunity to strike.
- Controlling your trades – your tradespeople can have a major impact on the quality and cost of a home. If they are wasting time or completing work poorly, you can expect your build expenses to begin rising. Not only will costs spiral out of control, but so will build times causing your business to suffer and your clients to become frustrated by delays.
- Build times – on the topic of build times, this in itself can affect variances in your business. The longer you take to construct a home, the higher your costs can become. While build times can sometimes be affected by uncontrollable factors, if you can minimise the delays – it’s worth it!
At Hotondo Homes we work with our builders to address these factors in order to minimise variances. Our range of home designs provides our builders with access to over 90 flexible floor plans removing the threat of custom builds disrupting workflow. Our systems will assist in monitoring and managing job costs on each project providing you the opportunity to determine where inefficiencies lie. We also offer training to our members to assist in their estimating in addition to our Building Services team who is there to help you along the way.
Want to learn more about joining Hotondo Homes? Get in contact with us now and find out how we can help grow your business.