To succeed as a contractor in current times it is important to scrutinize how your business is operating to avoid failure. You already know that being able to get bonded can make or break you as a contractor. So what better advice than to use the same criteria that the surety companies use to determine bondability to run your business and in doing so prevent failure along the way. The following are 10 ways to help keep your business afloat.
1) Check for clear and fair contract language.
2) Look for questionable terms on the bond forms.
3) Use a CPA that is familiar with the construction industry.
4) Don’t bid a job to keep your staff busy. Instead, reduce overhead and check margins.
5) Don’t bid the competition. Bid the job.
6) Have a bank line of credit and then an additional line in case the original line does not get renewed.
7) Stay liquid.
8) Negotiate prices down and lock down prices from suppliers.
9) Require sub-contractors to be bonded especially if they are doing a substantial portion of the work or you have no work history together.
10) Check the state insurance department for a list of high quality surety companies.
If you can stick to following these basic principles, you will be on your way to surviving these difficult times and creating a stronger business model in the process.
For additional information, visit: www.sio.org