569: How Not To Undercharge Your Construction Clients

Contractor Success Map with Randal DeHart | Contractor Bookkeeping And Accounting Services

This Podcast Is Episode 569, And It's About How Not To Undercharge Your Construction Clients Contractors like you know how to pound nails, pour concrete, build homes and commercial structures, bend pipe and pull wire, install roofs, lay carpet, paint walls, and perform a thousand other tasks. So why are you not enjoying the same standard of living as other professionals? Because you are doing all of those things for anybody and everybody who asks you to. Too many contractors are overworked, undervalued, and underpaid. We seek to change that for as many contractors as possible as we know how almost every sound, solid, hardworking, well-intentioned contractor is going out of business or barely scraping by, and that has to end here and now.

First, I must address how this could be an internal cause, such as how you deem your self-worth. Imposter syndrome is a common problem affecting people in various industries, including construction. For those who don't know, imposter syndrome is the feeling that you're not good enough or don't deserve your success despite evidence to the contrary. This can lead to undercharging clients, which is bad for business and perpetuates the cycle of feeling like an imposter.

In construction, imposter syndrome can manifest in many ways. You may feel like you need more experience or the proper education or training. You may be comparing yourself to others in the industry who seem more successful or knowledgeable. Whatever the case, it's essential to recognize that these feelings are common and don't have to hold you back.

However, when imposter syndrome leads to undercharging clients, it can have serious consequences. Not only are you undervaluing your work, but you're also potentially setting yourself up for failure. If you need to charge more to cover your expenses, you may need help to make ends meet or even go out of business.

So, what can you do if you're struggling with imposter syndrome and undercharging clients?

Here are a few tips:

1. Recognize your value: Remember that you have something valuable to offer your clients, whether it's your experience, expertise, or unique perspective. Feel free to charge what you're worth.

2. Focus on your strengths: Instead of comparing yourself to others, focus on your strengths and what sets you apart. Could you highlight these strengths in your marketing and client interactions?

3. Get support: Talk to others in the industry who may have experienced imposter syndrome. Join a professional organization or mentorship program to connect with others who can offer support and guidance.

Now that this mental dilemma is tackled, let's examine your systems and processes.

Working IN your business is a JOB (Just Over Broke)

Working ON your business is where MONEY IS MADE

What if you could do both? Work in your business and have a higher standard of living.

Because most small construction businesses focus on survival, you pay close attention to the bottom line. This makes sense, but it also leads to being seriously overworked. Contractors like you are under increased pressure to cut their prices to get enough work, which means they need to reduce costs.

What to do?

1. Accept that you have to raise your prices at some point

It's a daunting task to consider raising your prices, as the danger of losing customers will be front of mind.

But the bottom line is this: you can only deliver quality service if you're charging enough. It's that simple.

If you're spinning your wheels trying to make up for the difference, you'll lose customers anyway. You won't be able to deliver the excellent service you're known for if you're constantly overworked trying to find profits elsewhere.

2. Understand what's costing you

Consider your business costs at least once per year. Check which products or services are making money and which aren't. Then, take it further and pinpoint each area's breakeven position.

You will then be able to decide how much more you need to make to be profitable and comfortable. Evaluate all avenues – supplies, staff wages, bills, rent and utilities, training, etc. Doing this regularly lets you see which areas cost you more over time. Those that cost you more will likely benefit from a price increase.

3. Bookkeeping

A construction bookkeeper is an expert at managing, sorting, and recording your business's financial transactions. They've spent time developing their skills and experience and seen and resolved bookkeeping-related issues that you may encounter. Their expertise makes them more efficient at managing those issues.

Your bookkeeper helps you maintain accurate records and understands your financial circumstances. They allow you to assess how to make critical business decisions, such as whether now is an excellent time to grow or when you should hold back. Your construction accountant can provide insight and advice on how to charge appropriately for your services based on your financial records and industry trends and help you take advantage of those opportunities.

Final thoughts

Imposter syndrome is a common problem, but it doesn't have to hold you back in your construction business. By recognizing your value, focusing on your strengths, and seeking support, you can overcome imposter syndrome and build a successful and fulfilling career in construction.

You work hard as a small business owner and deserve compensation for the time you put into your business. As you work in your field, you gain more skills, experience, and knowledge, which translates to more value. If your construction company is better than it was a year ago, it's time to charge accordingly.

Don't undervalue yourself. Remember, as we always say, contractors like you deserve to be wealthy because you bring value to other people's lives.

PS

We offer free resources to help you save time and money that you can download and print now.

About The Author:

Sharie DeHart, QPA, co-founded Business Consulting And Accounting in Lynnwood, Washington. She is the leading expert in managing outsourced construction bookkeeping and accounting services companies and cash management accounting for small construction companies across the USA. She encourages Contractors and Construction Company Owners to stay current on their tax obligations. She offers insights on managing the remaining cash flow to operate and grow their construction company sales and profits so they can put more money in the bank. Call 1-800-361-1770 or [e-mail]