01/01/2025
The Hidden Goldmine in Your Business
The New Profit Series
Let me tell you a quick story. Last week, I sat down with my accountant to review our books. We’re a construction estimating and design business, but as we went through the numbers, one line item stood out: $10,000 a month on subscriptions. That’s a lot of money, I thought. “Where is this money going?” I asked. My accountant pulled up an exploded view of our subscription expenses.
Some made sense — Office 365, Zoom accounts, Estimating Software — those are essentials for running our business. But then there were others I had no clue about, like video editing plugins. Video editing? We’re in construction, not videography! After skimming through the list, we identified $1,300 we could save every month. That’s $15,500 a year — the equivalent of someone’s bonus or funding a new tool for the team.
This revelation made me think: How often do businesses, in their quest for growth, overlook the low-hanging fruit right under their noses? We just need to open the door to these hidden gems.
Photo by Bud Helisson on Unsplash
The Devil is in the Details: Tracking Workforce Time
Here’s another example. Imagine you run an electrical contracting business with 10 electricians in the field, each earning $100 an hour. If you’re not using a GPS-enabled time-tracking app, small inefficiencies can add up. Let’s say each electrician takes an extra 30 minutes a day due to late starts or extended breaks. That’s 5 extra hours a day, 110 hours a month (assuming a 22-day work month), and 1,320 hours a year. At $100 an hour, that’s $132,000 annually — money slipping through the cracks.
Now, what if you invested in a time-tracking app like BusyBusy or ClockShark? For a fraction of that cost, you could not only recover that money but also improve accountability and efficiency.
The Cost of Ignoring Material Waste
Let’s pivot to another area: materials. I recently spoke to a friend who runs a small construction firm. He discovered they were losing close to $50,000 annually because of poorly managed inventory. Leftover materials from one project were either forgotten in storage or disposed of, while new materials were purchased unnecessarily.
To solve this, he implemented a simple inventory management system. Now, materials are tracked, shared across projects, and repurposed when possible. This change not only saved his company $50,000 but also improved sustainability — a win-win.
Overlooking Energy Savings
Another hidden area of cost optimization is energy consumption. A contractor I know outfitted his office and warehouse with energy-efficient LED lighting and smart thermostats. While the upfront cost was about $8,000, the annual savings on electricity bills amounted to $12,000. Within eight months, the investment paid for itself, and the savings now contribute directly to the bottom line.
Trimming the Fat: Regular Audits
Here’s a universal truth: Businesses accumulate inefficiencies over time. Whether it’s unused subscriptions, outdated software, or redundant processes, every organization carries some level of “fat.” Regular audits can uncover these areas. For instance:
Subscriptions and Licenses: Cancel what you no longer need.
Processes: Automate repetitive tasks.
Energy Use: Switch to more efficient systems.
Equipment: Maintain and optimize usage to extend its lifespan.
A Call to Action: Start Today
Cost optimization isn’t just about saving money; it’s about making your business leaner and more efficient. Here’s an expanded list of actionable steps you can take:
Review Subscriptions: Identify and eliminate services you no longer use.
Optimize Workforce Management: Use GPS-enabled time-tracking tools to improve accountability and reduce inefficiencies.
Audit Material Usage: Implement inventory management systems to minimize waste and repurpose leftover materials.
Improve Energy Efficiency: Invest in LED lighting, smart thermostats, and energy audits to reduce utility bills.
Automate Routine Processes: Use software to handle repetitive tasks like invoicing, payroll, or scheduling.
Analyze Equipment Utilization: Track equipment usage to ensure it’s being used efficiently and consider renting underutilized assets.
Negotiate Vendor Contracts: Review contracts with suppliers to negotiate better terms or discounts.
Consolidate Tools and Software: Eliminate overlapping functionalities by choosing multi-purpose platforms.
Train Your Team: Educate employees on best practices to reduce waste and improve efficiency.
Track Key Performance Indicators (KPIs): Monitor metrics like labor efficiency, material costs, and overheads to identify areas for improvement.
By addressing these often-overlooked areas, you can uncover significant savings and reinvest them where they matter most — whether it’s your team, tools, or growth initiatives. Take a closer look inside your business; you might just find a goldmine waiting to be tapped.
For the contractors: Bonus Point
Estimating & Bidding is crucial to your business — and its challenging to find good estimating hands. By having a partner like Bidding Enterprise, you get skilled estimators who work as a part of your team, therefore increasing your bidding capacity and giving you a competitive edge to win more job. You can save up to 2/3rd of your pre-contruction cost.
Call now to connect with business.
