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Best Practices in Running a Small Contracting Business

Contracting Business

Having your own contracting business seems like a dream come true? Steady cash flow, little supervision, loyal employees, a lot of customers lining up… The truth is quite the opposite and contractors have to face a ton of challenges every day. How to avoid a financial meltdown and stay on top of your game? Here’s a list of best practices you can follow in order to successfully run a small contracting business.

Best Practices for Your Contracting Business

Running a contracting business can be an uphill battle even if you’ve been doing pretty well in the past. Contractors have to be prepared for every possibility because literally, everything is possible. Payment delays, high and low seasons, understaffing, faulty equipment and deadlines chasing you like prey. Every coin has two sides and you can’t avoid misfortunes, but we’ll show you how to minimize holes on this bumpy road.

Be an Expert in Your Niche

There are plenty of general contractors out there. Being one of them will do you no good, especially if you’re running a small company. Instead, focus on something you’re an expert at. It can be window installation, painting, services for offices solely, you name it. Choosing your niche doesn’t mean you have to narrow down the range of your services. Simply promote the ones of your greatest expertise.

Not only will this reduce your true competition, but will also help you keep healthier profits, and be more efficient. Standing out is always beneficial in this business.

Choose Your Customers Wisely

Accepting every single project is not a good idea. Of course, it’s pure revenue for you, but sometimes the money isn’t worth the effort. If you’ve just started building your reputation, it’s hard to resist any incoming project, and you don’t have the luxury to be picky about your clients, but think twice. If you know the job will be a struggle, maybe it’s better to turn the offer down and look for a better opportunity.

Money is not just cash; it’s time and effort as well. Throughout your ‘career’ as a contractor, you will learn how to distinguish good projects from the bad ones.

Be Organized

As a contractor, you’ve got plenty of things that need to be taken care of. Good organization is crucial to keeping everything in order. Contractors from Florida suggest that having an effective system in place allows you to control your company’s contracts, accounts, employees performance, and training. Understanding every aspect of this business will lay the groundwork for future expansion.

Be available

Construction is a complicated process and your customers may have a hundred questions. Make sure you inform them on the progress as you proceed so that they don’t feel neglected.

Be available to a certain extent. Nobody is telling you to be available 24/7 especially when you’re running a small contracting business. But responding to queries, messages and calling your clients back within 24 hours is a good practice. Although, everything depends on your working hours.

Follow Your Competitors Practices

Whether you’ve just started your contracting company, or you’ve been in the market for a while, it’s always good to know what your competitors are doing. We’re not saying you should copy their strategies as every business is different and they might simply not work for you. But keep an eye on your competition to stay on top of the game.


There’s nothing better than a good word of mouth, but in case you’ve just started your business, you may need to incorporate some marketing strategies. Start by answering three simple questions:

Contracting business is very specific, therefore, unlike any other company, you should promote yours locally. Don’t hesitate to spend some money on an advertising campaign. A good marketing strategy will not only deliver more projects but more profitable clients as well.

Consider Outsourcing

One of the most common mistakes made by contractors is overstressing themselves with too much work. Paradoxically, in this business more work can mean less money. Taking too many projects leads to poorer execution and worsened quality of the outcome. You’re risking losing clients.

Outsourcing work is a much better idea as it is time-efficient and can eventually reduce the overall cost. Hiring people who are professionals in a certain field will be extremely beneficial for your business, saving you both time and money.

Control Your Finances

Expenses, expenses, expenses… being a contractor means rotating huge amounts of money. You need to pay attention to overhead costs and control your finances as such. After all insufficient funds are one of the main reasons contractors have to close their companies.

Before you accept any project, plan the budget. Be aware of how much money is going in and how much is going out. Predict the expenses and cut the unnecessary ones. Kindly remind your clients to make payments – you can even offer some incentives if they pay on time, and penalties if they do otherwise.

Document Everything

Before you take any project, make sure all the details and steps of execution are written down and signed by both you and your client. People like to avoid payments and will literally go to any lengths to prove you wrong and reduce the final price. You have to be prepared for such a situation and secure yourself with a document stating every single detail of the project.

The cost, however, is always difficult to predict, therefore your client should mention a maximum budget he is willing to dedicate. The devil’s in details.

Be Always Prepared

Strategic planning is the key. Being in this business requires you to anticipate the best and the worst at the same time. It’s even more important for a small contractor as little issues usually hurt the most. Unexpected things will always happen so it’s better to be prepared for everything than to struggle when trying to fix things.

The size of your business doesn’t matter. Being unprepared can make you pay the highest price – your company. You don’t want to learn it the hard way, so start your day-to-day plan to be ready for every scenario.

Separate Private Life from Professional Life

They say that the first five years are critical, no matter what kind of industry you are in. Business owners are trying hard to overcome all the obstacles in order to thrive. It’s easy to get caught up at work, especially if you are a contractor. You need to be able to separate your private life from your professional life.

Living a happy, balanced life will be beneficial for both you and your company. Putting too much time and energy will make you unhappy. If you want to be a better contractor, you need to be a better version of yourself first.


Running a small contracting company can be tough. Things will go wrong quite regularly and contractors have to know how to face the music. But being in this business can be also very rewarding and with the right tools and best practices you can stand out from your competition and become a pro in the contracting business.

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