New construction companies in Texas stand a good chance of surviving if they are operated in a smart manner. From home renovations to road construction, there are plenty of places to steer a construction business. To understand where most costs come from and how to keep them low, new business owners can familiarize themselves with the following information.
According to Chron, there are general or indirect expenses that require payment to a contractor on a regular basis and are not related to any specific project. Direct expenses are those that change from job to job and are specific to one unique project.
When it comes to indirect expenses, these can include anything from a staff party to installing specialized glass in a home. Other indirect costs include benefits and salaries of personnel and employees who do not work on the job site. These may include executives, bookkeepers and administrative employees.
Another indirect expense is the office space the company occupies as well as utilities, supplies, rent, internet and phone lines and insurance. Indirect expenses also include work vehicles, physical property, associated costs and other miscellaneous items like advertising, marketing, travel costs, accountants and lawyers.
Direct expenses are easier to pinpoint because they are specific to the job the company is working on. They tend to fall into three different categories:
- Space and structure, including trailers, leased office space and architect’s quarters
- Salaries for a specific project for schedulers, foremen, job superintendents and engineers
- Equipment costs and rentals for things like backhoes, bulldozers, cranes and jackhammers
Both indirect and direct expenses pay a huge part in company loss and profit. If overhead costs are trimmed, a company can bank more money out of each job rather than paying extra for late fees, extra property or outdated technology. The Balance suggests that companies invest in energy-efficient and sustainable methods, negotiate contracts, implement reward programs and hire multipurpose laborers to cut back on operating costs.