How to do better than just stay afloat in construction?

Doing better than just staying afloat in construction is not always easy. The building game is a tough gig.  You operate in what economists call, “a fluid market”, driven by demand and a bunch of other stuff like, “interest rates, rapid population growth, Donald Trump’s election, the price of rice in china………”  You name it.  It all seems to affect your business and how you make money.   But regardless of what the experts say you still have to find work, price it, win it, build it, defect it, finish it and get it handed over on time, to budget and quality. SIGH

And all before Christmas, because as we all know, the world stops turning after Christmas Day.  That’s why everyone wants everything done by them!!!!!

So how do you plug the holes in the SS Construct, stay afloat and better still, make ‘bloody good’ margin?   After all you got into business to make more money than you did on the tools.

The experts will tell you to,

  • do to the basics,
  • keep it simple,
  • stick to your knitting,
  • focus on what you do best,
  • know your market,
  • know your competitive advantage,
  • what gets done gets rewarded…..

Your head starts to swim – there is water ingress.   Done the lifejackets!  MAN THE LIFE BOATS!!!!!!

But wait.  The pumps have kicked in and the fog is beginning to lift.

Crisis averted – for the time being. However we all know that there will be more stormy weather in the future.

And as a good captain, you need to carry out repairs and make your ship better equipped to handle the next big blow.

But better still, you want to make her not just a watertight ship, you want to make her a Flagship.  One that braves the elements and beats them.  You want to make your dough, take a long cruise to Tahiti and know you have money coming in while your sailing the high seas.  So what do you do?

You focus on the ‘key areas of influence’ in your business because you need to allocate your most precious resource carefully – your time.

Key Areas of Influence in Construction

The most important for builders are,

1. Time Management

Time is your most critical asset.  As they say ‘ They’re not making any more of it’. Of course builders are stretched for time. Having more time boils down to two steps: Identifying the essential and eliminating the rest.

2. Cashflow

Healthy cash flow is a vital part of running a business. It is, literally, the make or break for many business owners who need to stay on top of their finances, especially cash flow, to ensure they can operate successfully.

3. Subcontractor relationships

Subcontractors are interwoven into the fabric of your business. In fact they make up the major part of your business.   Good ones can make the difference between being a ‘hero’ or a ‘zero.’

4. Marketing and getting the right clients

Competing on price alone is a race to the bottom where the winner actually loses.  A builder needs to position himself as the prize and sell to the client on a Cost of Inaction basis.   If you are relying only on word of mouth your letting a large part of the market slip by you.  This includes social media and digital media marketing.  According to LinkedIn data, social media marketing was the single highest in-demand skill in Australia in 2015, closely followed by digital media marketing.

5. Processes

From hiring, onboarding, HR, running finances, payroll, procurement including estimating, tendering, document management, design, project management, job costing, accounting and paying bills, and then actually getting the job built.  Builders are stretched across many business functions.

6. Regulations

QBCC, Workplace Health and Safety, Taxation, Superannuation, Workcover, compliance to Australian Standards and the Building Code in tendering, design, construction, compliance to DA, BA, airspace restrictions for cranes, and local council by-laws.

Nobody likes red tape. Least of all builders with limited time and multiple aspects of a business to take care of themselves.Deloitte published a report “Building the Lucky Country #4 – Unleashing productivity” outlining that rules, regulations and red tape costs Australians $249B a year in compliance and loss of productivity. That’s the equivalent of everyone working 8 weeks a year just to cover the cost of following the rules.

7. R & D

Given the range of tasks above, it’s no wonder that innovation – tomorrow’s problem – is often shifted to the backburner.  But staying informed about new products and processes can be your unique selling point.