The 7 Biggest Mistakes Contractors Make
There are thousands of contractors in every country, with the global number spinning into millions. The bulk of these consultants compete to secure contracts from organisations and governments alike. With hundreds of industries ranging from construction to procurement, home improvement, and several others, successfully securing and executing a contract without hiccups is getting even harder.
How then do contractors make their contract execution smoother? What are the mistakes contractors make when bidding or executing contracts? And how can contractors ensure they never experience some serious problems again?
Here Are The 7 Biggest Mistakes Contractors Make:
1). Over-Promise But Under-Deliver:
This is one of the biggest mistakes contractors make. In a bid to impress the client before or after they’ve secured the contract, they promise weigh more than they may even be able to deliver. The problem with over-promising is there’s a high chance you may not deliver on your promise, and if you successfully do deliver, you may have spent a lot of what you didn’t budget, which would greatly reduce your margins from the contract.
It’s a lot better to promise a great job within a safe margin, than to promise the unbelievable and instead deliver something mediocre. When you start to fall short on your promises, you unconsciously gradually build an untrustworthy image. And with a poor delivery streak in your industry, you will gain a reputation that everyone is repellant to.
Promise a great job within a safe margin, so that when you over-deliver, your clients would be more than happy to spread the word about your excellent delivery rate.
See Also: The Top 10 Reasons Small Businesses Fail
2). Working For A Bad Client:
Totally avoid clients that are entirely out to rip you off. These type of clients always try to play down the entire contract cost to a ridiculous fee. They don’t care what you think about the pricing, and would say you either take what they have to offer, or you walk out the door.
Avoid these clients like a plague. Most of them never refer your services to anyone else. This is especially true because their tight-pocket state makes them hide the information of a more affordable contractor from their peers.
If you successfully execute three different contracts for a person you notice is greedy to the bone, realise you still make next to nothing, and don’t get a single referral, take to your heels, and run like your financial future depends on it.
3). Naively Signing Bad Contracts:
Before you ever put ink on any paper to seal any form of agreement, read and re-read the terms several times over. You need to know that you will always be held accountable for whatever terms and conditions you sign to.
Contracts and general agreements can get dubious a lot. A bulk of the time, the organisation awarding the contract puts in little unnoticeable clauses to tie down a contractor for highly unexpected requirements.
Before signing anything, don’t just read it through there and then. Take it home to have a second view, and if you can, consult a lawyer to go through every single word. Any part of the contract that seems ambiguous should be flagged immediately. Make your concerns known to the organisation, and have them adjust it.
Some of the problems you could face if you sign a bad contract are:
- Throwing away your right to sue.
- Agreeing to some work not covered in your price.
- Removing your right to force a quick payment.
- Not specifying a clause for payment on change orders.
And a few others.
In whatever you do, avoid signing a bad contract by all means. This is one of the biggest mistakes contractors make over and over again.
4). Not Knowing The Full Cost Of The Work:
When most contractors bid on a job that’s out of the ordinary from what they’re usually used to, they make mistakes on their costing and delivery. The major reason isn’t because of the fact that they probably haven’t done this before, but from the fact that they are overly-excited at the potential of the contract, and would say anything, even make big mistakes in their costing, just to get it.
When the job is finally awarded and they’re required to deliver, they get into a fix. They notice the depth of what they’ve put themselves into, realise they may not be able to deliver, may deliver but make little profits, or may deliver and only incur losses.
Before you give a costing for any project at all, do a careful analysis of the project, determine what each of your members can deliver in a day, determine the cost of everything required to execute the contract, and finally, add a little extra margin on top of the round figure just incase you run into surprises, which is most likely going to happen.
5). Running Their Contracting Business Without A Plan:
Because of the unpredictable nature of contract payments, contractors take whatever comes their way, and spend carelessly. They pay lesser attention to their accounting books, and by the time the year has run out, they realise they had an unprofitable year, some of their deliveries were behind schedule, their equipments ran into a lot of problems, and things didn’t entirely go the way they had planned it to go.
Working with a plan is crucial to your success in any business. Although planning can get tiresome and frustrating to many individuals, it’s highly crucial you work with one, so you’ll be on track every step of the way and immediately know when things are right or wrong about your business.
See Also: 10 Reasons To Write A Business Plan
6). Pricing Too Low:
Pricing too low is one of the biggest mistakes contractors make. In a bid to get a contract by all means, don’t neglect the issue of price. Without a fair sum, your business will not be able to stay afloat.
There’s absolutely no valid reason to charge too low except it’s your first time with the client, and you’e trying to establish the initial relationship. Charge accordingly, and most importantly, charge to ensure both your client and your business’s survival.
7). Targeting Consumers With No Money:
Some contractors target millennials as clients. While depending on the service you’re offering, a millennial could be a great bet, the real cashflow lies with the folks in their mid-thirties and above. These individuals have been in their industries for a long time and have a constant need for consultants. They know some things are better left to contractors to handle, than taking it on themselves.
By targeting this group of individuals instead of the millennials, you increase your chances of securing and executing more contracts.
What are your thoughts on these 7 biggest mistakes contractors make? Let me know by leaving a comment below.
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