Budgeting for any type of small business is important, but the quirks of the construction industry make it absolutely essential. The cost to do business for construction companies is constantly rising and profit margins are getting ever slimmer over time. Without a proper budget, it becomes increasingly difficult for a small business to survive. 

Many factors that affect a construction business make it difficult to make a proper budget that can help them weather whatever economic crisis might develop. In this article, we will go over several ways that a small construction business can create a workable budget to stay competitive through these uncertain times. 

Be able to forecast

obody has a crystal ball that allows them to see into the future and be able to predict what is going to happen. However, small construction businesses need to do exactly that to be able to create a budget. Revenue comes from projects and there are often gaps between those projects that impact revenue in a big way.

Being able to see when projects will be done will allow a company to make a budget that accounts for the downtime in between projects so you can plan on when to spend and when to save. 

One way to be able to accurately forecast revenue is to make sure you have a good bid management system in place. With the right system working, it will be easier to see when projects will be coming in since your company is winning a lot of the bids for those projects. 

The types of projects also have a big bearing on revenue so your bid management system can help you select the best types of jobs for your company. For instance, if your company often does government contracts for things like road construction, then you will be able to know which jobs will be repeated in the future and be able to budget accordingly. 

Financing strategies

The saying cut hay while the sun is shining is never more appropriate than when it comes to financing equipment in the construction industry. The idea is that you buy equipment on loan when you know when you have a project coming up and not when there is a gap in between them when making the payments may get difficult. 

Timing when you make big purchases that are financed should only happen when you have a budget that accounts for those times. 

Do internal audits

Taking the time to look into the processes that you have in your company will help you create an accurate and workable budget that is based on the realities of your industry and how they relate to your business.

A key to remember is that a budget is not something that is a “set it and forget it” type of system. It has to be revised and reviewed often to reflect the reality of what is happening in your business. Doing these audits regularly will allow you to identify the changes that are happening and be able to adjust the budget accordingly. 

Image Source: Pexels