For your contractor clients, the ability to bid on projects that require a surety bond can help them to build their business.
This is 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, if your client doesn’t have a bonding history, it’s harder for them to get bonded in both the standard and the non-standard markets.
It’s still possible for your clients to get bonded without a bonding history. You just need to make sure that they can present their business in the best possible light when you submit their first bonding application.
Here are four things to look out for when you start.
1. Make Sure They 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 these contractors, being able to show that they understand where they can be the most effective in their industry counts for a lot.
This can work in different ways. If their 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.
Instead, work with them to focus on projects that play to their strengths and fit the scope of what their company can do, and do well. Explain to them that it’s better to demonstrate consistency over the course of several projects rather that dropping the ball on a project that was too big for them to begin with.
2. Make Sure That Their Financials Are in Order
The first thing that every contractor needs to understand about getting bonded is that it isn’t as simple as signing up for an insurance policy. This is especially true if the contractor has credit issues or a limited credit history.
Explain to them that they should approach submitting a bond application in the same way that you approach applying for a bank line of credit or a mortgage. They 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.
Even if their business is small, having a good CPA that understands construction project accounting can make a big difference. This is where you can step in and make recommendations that will help them to grow their business.
3. Ensure that They Can Demonstrate a Track Record
Running a business is about more than knowing your trade. It’s also about demonstrating that your clients have the experience necessary to manage a project. Being able to demonstrate project management experience can go a long way.
Ask your clients about recent projects where they took a leadership role. Ask if they served as a project manager for a contractor or general contractor, and see if they would be able to get a reference.
4. Pair Them with the Right Bonding Company
Not all bonding companies are created equal. Some will simply use your contractor client’s credit score and bonding history as a measurement of their ability to get bonded. If they lack a bonding history or have credit issues, this can make it harder for them to get the bond you need to build your business.
Cinium works differently. Our team of construction industry experts can issue surety bonds at competitive rates without requiring collateral or CPA reviewed financials.
Ready to put Cinium’s experience to work for you? Schedule a free consultation today, or give us a call at (855) 4-CINIUM.