The ability to bid on projects that require a surety bond can help contractors to build their business. That’s because it demonstrates that they are capable of getting the job done and allows them to compete for a wider range of projects.
The trouble is unless you have a bonding history, it’s harder to get a surety bond.
It’s still possible to get bonded without a bonding history. You just need to make sure that you present your business in the best possible light when you submit your first bonding application.
Here are seven ways to do that.
1. Have Realistic Expectations
Many contractors make the mistake of bidding on too many types of projects, rather than focusing on an area where they can specialize.
For example, if your company’s largest project to date has been for $250,000, attempting to bid on a project with a budget of $2.5 million may not be a good idea.
For contractors, being able to show that they understand where they can be the most effective in their industry counts for a lot.
Instead of trying to grow too quickly, focus on projects that play to your strengths and fit the scope of what your company can do, and do well. Demonstrating consistency over the course of several projects will count for more in the long run.
2. Develop a Business Plan
Having a business plan can help demonstrate that you understand how to realistically grow your business. Make sure that you don’t let it gather dust. Instead, review it at least once a year and share it with your agent, CPA, and others who can provide you with a greater insight into the state of your local economy.
Use these insights to shape your plan and you’ll demonstrate that you know how to get the job done.
3. Get Your Financials in Order
One thing that every contractor needs to understand about getting bonded is that it isn’t as simple as signing up for an insurance policy. You should approach submitting a bond application in the same way that you might approach applying for a bank line of credit or a mortgage. You need to demonstrate that you understand your company’s financials and can present proof that you know how to manage your company’s funds effectively. Demonstrating that you have sufficient liquidity and the ability to manage your cash flow is also important.
4. Organize Your Back Office
A good way to demonstrate that you can manage your company’s funds is by investing in, and making good use of, accounting software. Quickbooks™ or other programs not only allow you to track your invoices, payments and payroll, it can help to organize your finances and allows you to create the financial reports that may be required with a bond application.
5. Hire a CPA
Even if your business is small, having a good CPA that understands construction project accounting can make a big difference. Make sure that your CPA is more than the person you go to for your taxes. Ask them for guidance in how to best optimize your back office and track expenses.
While Ox Bonding doesn’t require CPA reviewed financials, having a CPA involved in the creation of your overall financial management strategy can still improve your chances of getting bonded.
6. Have a Track Record
Running your own business is about more than knowing your trade. It’s also about demonstrating that you have the experience necessary to manage a project. Being able to demonstrate project management experience can go a long way.
Be ready to talk about recent projects where you took a leadership role. If your served as a project manager for a contractor or general contractor, see if you can get them to provide you with a reference.
7. Work with the Right Bonding Company
Not all bonding companies are created equal. Some will simply use your credit score and bonding history as a measurement of your ability to get bonded. If you lack a bonding history or have credit issues, this can make it harder for you to get the bond you need to build your business.
Ox Bonding Can Help
Still need help getting your client bonded? Our team of construction industry experts can issue surety bonds at competitive rates without requiring collateral or CPA reviewed financials.
Ready to take advantage everything that Ox Bonding has to offer? Enroll today, or call (877) 55-THE-OX.
Want to organize your back office and get great business references? Our Contractor One-Sheets can help you get started.