Why It’s Important To Always Hire A Bonded Contractor

A contractor bond, or contractor’s license bond, is a contract in which a surety company promises your contractor will follow state rules and regulations.

What is a surety bond?

If you are looking for someone to remodel your kitchen be sure only to hire licensed contractors who are legally able to operate in your state. The contractor’s state license board are there to help ensure contractors have the proper training and bond in place to abide by state laws. Purchasing a license bond for contractors in California is fairly simple. The bonds pricing is based upon the contractors credit history and can often times be purchased and issued same day.

Why you should only hire a bonded contractor

Working with bonded contractors helps to ensure that your work is properly protected in the event something were to happen on the construction projects or there were to be any defects with the contractor’s work.

It should be noted that being bonded is not the same as being insured. The bond only guarantees you the proper fulfilling of a job contract. The contractor should also carry liability insurance so that you, the customer, are not held responsible for any on-site injuries that may occur on your property.
Contact the bonding company directly if you have any questions about the agreement: they’ll be glad to help. Make sure the contractor is bonded, licensed, and insured, and you will be on the side of the angels.


If you are a contractor, why should you choose to be bonded?

Being bonded gives you instant credibility with the public. Customers are looking for every measure of protection possible when dealing with large money transactions, and if you choose not to be bonded, it will reflect poorly on your abilities as well as your business. It assures your customers that you:

— have undergone a rigorous prequalification process
— are much more likely to complete the project as agreed upon
–will have a backup should severe problems occur.

Having read the importance of the contractor’s bond above, how much does a Contractor Bond Cost? Well, the Sector of Industrial Relations’ Division of Labor Standards Enforcement wants farm labor contractors to post $25,000 surety bonds. Some contractors need to post $12,500 to qualify for private bonds before carrying out business within the country.

All of these contract bonds are in respect of underwriting consideration, hence the price you’ll pay for your contractor bond directly reflects on the status/review of your private credit report. Being covered by a surety bond is a win-win proposition for both customers and contractors.

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How to Increase Profits for your Contracting Company


Contractor Company Profitability

To increase the profit of your contractor company in these tough economic times, you need to identify the key profit drivers. Similarly, you should come up with effective strategies and prioritize them in order of importance. It’s recommended that you write down your goals and how you want to achieve them. Further, come up with practical ways of implementing those strategies. Since the construction industry is driven by the law of demand and supply, much work should be focused on cost management. Let’s go through some strategies on how to increase profits for your construction company;

Effective Cash Management

Today, Cash is the lifeblood of any successful company. You must align your cash inflows and outflows. Secondly; you should budget and plan your cash since it becomes easy to pay your expenses when they are due. Likewise, you should identify your daily spend rate and how much cash you have at hand. In fact, lack of proper money management can bring liquidity crisis such that it becomes impossible to meet both long-term and short-term cash obligations. This could result in the inability to pay your suppliers or even meet the wages of your workers.  A great example of proper cash management is the California company: contractor license bond- contractor bond quote. With a Cash flow shortage could lead to operations close-down or bankruptcy. Therefore, you should make sure you understand your supplier’s terms of payment before engaging in any contract. The best way to check if you have good cash management is to compare your costs with other similar companies in the industry.

Decreasing operating costs and increasing production

This is knocking two birds with one stone. The most sensitive cost is labor. You should hire cheap labor and keep productive employees. However, you should concentrate on retention rather than hire. Focusing on conservation will help to avoid costs associated with recruitment and lost productivity. On the other hand, you should have the right suppliers. This will make it easy to negotiate for discounts and better prices when buying materials in bulk. To increase productivity in your company, you must have systems in place that will help you get the most out of your resources.

Expand your market

Starting new construction projects in different areas will help in increasing the profitability of the company. For instance, you can use the social media to establish such places. If you encounter difficulties in penetrating a new market, you can partner with other companies.

In a nutshell, running a successful business involves increasing revenue and cutting on costs. To dominate the industry, you need to employ the above strategies on how to increase profits for your construction company to take it to the next level.

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