Apart from the standard 10% commission that all parties receive along the pipeline, contractors have a very good reason for doing what they do: profit. Contracting is one of the single most profitable jobs in the world, as there are endless opportunities for the suave businessman. Not all contracts are profitable however; some contracts are renowned for their potential to lose money for the contractor. Here are some tips on what features make for a profitable contract:
Who is the Customer?
Always do a background check on the customer to see who they are. This will ensure that you know the benefits and pitfalls of doing business with whoever it is. Some customers are notorious for never paying a cent. For instance, whenever a big conference comes around, nation states scramble to offer the hospitality contract to big hotels around the country. Unfortunately, most countries also happen to be terrible customers, with most big hotels never getting paid for hosting delegates and volunteers. These contracts can be great PR for the hotels concerned (as they will be named official hospitality partners and promoted in all publicity materials) but will leave them severely out of pocket.
Enter a Supplies Contract
Services are always a little risky to take on, but as long as you have a reliable source, supplies is a good field to be contracting. For instance, construction suppliers simply undertake to provide all or some of the materials for building work. As this is not necessarily dependent on having large manpower, the contractor will be able to receive his/her profits in time.
If the contractor had chosen to supply the work crew for a construction job instead of being construction suppliers, it would have been a different story: with high turnover and inefficiency, the contractor would have suffered several losses by the end of the contract period.
Grease the Wheels
No, this is not an advocacy for bribery; it is a call for motivation. Contracting requires much diplomacy in order to win the tender notice battle against competitors. While each contractor has their own way of dealing with things, it doesn’t hurt to treat your own people with as much respect as you treat the decision makers. Every contractor needs a team of dedicated and hard-working individuals in order to get their supplies/ services out in time. If the contract is not carried out in time with all promises delivered, most contractors are legally obliged to pay out of their own pocket for being off schedule. Therefore, being on good terms with your drivers, manual labourers, workers etc. will keep them motivated and have the cogs and wheels running smoothly to ensure slick service.