As a commercial specialty contractor, it can be frustrating to have the crew, time, and skills you need to take on construction projects but not enough cash to purchase materials. Add in being denied a bank loan, and the frustrations mount.
With your back against the wall, dipping into your personal bank account may feel like an easy solution. But when you take into account how long it takes for specialty contractors to get paid, it gets risky quickly, especially if you’re just starting out.
Many contractors feel using their personal accounts is the only way to get the cash they need to help their business and start bidding on jobs.
In this article, we’ll share five ways you can increase your cash flow when the bank denies you access to the money you need to start or grow your construction company.
1. Partner with other professionals or organizations in your industry to leverage each other’s resources
As you build your business and reputation, partnering with other contractors can lessen costs and spread responsibility across individuals. Creating partnerships provides access to a wider range of resources to use within your business, helping create less of a cash flow burden for you and your team.
2. Use Materials Financing to keep money in your pocket and not pour all your cash into upfront materials
Many contractors share that they receive denials from banks when trying to take out loans, especially in the beginning years. And when they are approved, they often don’t get the amount of funding they need.
Getting approved for a bank loan requires a great deal of digging into your finances, so it’s extremely disappointing to receive a denial. Materials Financing is a less intrusive cash flow solution that allows you to start your job now and pay Levelset when you get paid, up to 120 days.
3. Cut unnecessary spending
Overspending on services or tools can hurt your bottom line. Taking a close look at expenses and removing costs that are not providing a significant return on investment can free up some cash flow. While it’s necessary to remove cash flow waste, it is important to remember that cutting areas such as marketing and payroll can make it harder to take on new jobs and actually cause your business to decline.
4. Bid on projects in your wheelhouse so you can work efficiently
Providing new services may seem like the only way to expand your business, but many specialty contractors have found the opposite to be true. What if you focused on your wheelhouse and became known for a specific service?
Bidding on jobs that require you and your team to learn new things can create cash flow problems. Broadening your offerings could require more resources if mistakes are made and more time if your team is learning new concepts. Sticking to your areas of expertise can lead to cash flow increases and keep you from stretching your team too thin.
5. Diversify supplier relationships to get materials cheaper and faster
Sticking with the suppliers you’ve worked with for years comes with perks — but you may have to branch out and search for new suppliers to ensure you’re getting the most out of your partnerships. Diversifying your supplier relationships could lead to finding vendors who are willing to provide discounts and priority shipping. Comparison shopping could be a money-saving tool to increase cash flow.
It’s unfair to feel like the bank and the contractor on all of your projects. You deserve options that protect you and your business.
Trying solutions like Materials Financing and bidding on projects in your wheelhouse can increase cash and keep you from damaging your personal finances. Next time you’re in a cash flow pinch, remember there are financial tools out there to help you, not hurt you.
Check out more articles on cash flow management here.