Top 4 Mistakes that Contractors Make

Life as a contractor or subcontractor is busy, there’s no denying it. With so many items on your to-do list, it’s inevitable that you’ll make a few mistakes. However, there are steps you can take to avoid four common mistakes we often see contractors make. Doing so will save your business time and money, and will greatly reduce your stress.

1. Not Using Contracts

Without a doubt, a failure to use contracts is one of the largest mistakes contractors and subcontractors make. The days of handshake agreements are long gone and a written contract can prevent misunderstandings. 

There are a number of crucial reasons for a written contract. First, it gives you the right to a legal remedy if the other party does not fulfill their side of the deal. Some contracts may include specific dispute resolution strategies, while others simply outline what constitutes a breach that could lead to a court hearing. 

A contract can also serve as a risk management tool that reduces ambiguity and future conflict by clearly laying out your obligations, as well as all other party’s obligations. Parties involved in a contract are also more likely to follow their promises if they are in writing. 

Contractors who do not use contracts are more likely to run into issues during the course of their projects. Resolving the issues may also be more costly and time-consuming without a contract than it would have been with one.

2. A Lack of Standard Contract Addendums

Negotiating contracts with different clients can be challenging. Using a standard set of addendums for your organization can improve the results of your contract negotiations. Unfortunately, many contractors fail to develop and use a list of standard addendums that could benefit their businesses. 

You should aim to go into negotiations with addendums that address your preferred terms for payment, project schedules, how to handle changes to the scope of work, and anything else that matters to your unique business. Every organization is different, but having a set of addendums that you take to negotiations will put you in a better position to have a favorable contract. 

3. Missing Lien Deadlines

Working as a contractor or subcontractor is a busy career. With many clients and projects to handle, some contractors miss the deadlines for key items, such as filing their pre-line notice. Without a system in place, it can be easy for things to slip through the cracks. 

To avoid this mistake, create a simple system that you or one of your employees can use to track lien deadlines. The system does not have to be complicated. It can be as simple as writing a filing deadline on a paper calendar. When a customer pays their bill, you can cross them off the calendar. If the deadline is approaching, you can begin working on your pre-lien notice. 

Missing the deadline to file a pre-lien notice, if you’re required to file one, forfeits your right to file a mechanic lien to recover any money you’re owed. There are other remedies for collecting outstanding monies, but they may take more time, money, and effort than a mechanic lien.

Adopting this small change can help you stop missing essential deadlines. If you’d like to create a simple system to help you file mechanic liens, take our comprehensive online mechanic lien course. 

4. Losing Opportunities to Reinvest in the Organization

Contractors who make one or all of the mistakes above end up making a fourth major mistake: losing opportunities to grow their business. 

Poor contracts and not having a mechanic lien system can cost a business a lot of time and money. Defending yourself in court or taking a party to court for nonpayment takes you away from the vital day-to-day work you do in your business.

With a simple mechanic lien system and a trusted attorney for contracts, you can safeguard your business against significant risks AND accrue money that you can reinvest in your business. With just a few small adjustments, you can have more time and money to invest in new or better equipment, additional employee training, or offering raises and better wages to attract outstanding talent.

If you want your business to grow, you need to manage your risks with simple systems and by partnering with an attorney. 

Avoid Major Contractor Errors with Counseling

Now that you’ve been exposed to some of the biggest mistakes contractors and subcontractors make, you should be thinking about how to protect your organization and yourself from these errors. 

If you’d like to discuss how to manage the risks that your business faces, get in touch with us today.