Working in the construction industry nowadays is proving to be a highly challenging exercise.
Interest rates skyrocketing, combined with rising prices for building products, increased lead times still imposed by Covid19 on supply chain, and skilled staff shortage, is leading many to wonder how they will make it to the other side of the tunnel.
When many construction giants are unfortunately succumbing to the difficulties of the industry, how does one navigate - and yet thrive - on such a pitfall?
No1 is presenting you with our new EDM series where we talk about suggestions of how to prepare for forecasted changes in the construction market, and discussing solutions that can help you and your business to survive, improve and grow.
Our ‘Enduring and growing in difficult times’ series comprises the following topics which will be presented to you on a monthly basis:
- May - Expanding your services - how to diversify your business to generate more opportunities
- June - Increasing your marketing efforts - how to promote your business, to propagate brand awareness and generate work
- July - Improving your customer service - how to achieve client satisfaction, with pre and post sales strategies
- August - Reducing expenses - how to shave off extra fat from your business to run a leaner, more efficient operation
- September - Offering financing options - how to diversify your offer of payment methods to allow for a larger number of clients to afford your services
- October - Hiring the right team - how to look for good candidates to improve your workforce and enhance effectiveness in your business
- November - Keeping track of your finances - how to be on top of your expenses and bills, to avoid being short in cash flow
- December - Using technology to improve your business - how to make good use of available technology to achieve better outcomes for an existing business.
In August 2022, Master Builder Association released their MBA’s Building and Construction Industry Forecasts in NSW (August 2022), which indicated an overall positive outcome for construction in the coming years, but not without a few obstacles for some sectors of the industry.
Details of the report suggested that the ongoing series of interest rate hikes, weakening house prices, and stagnant rents in the Sydney market would take their toll during 2022, with a 6.3 per cent decline in medium-high density home building commencements likely to occur.
It is likely that activity will drop back further during 2023 and 2024. The MBA are also projecting that medium and high-density home building starts will rise to about 30,800 in 2026, a gain of 24 per cent on the 2020 low point.
Navigating through this current market and ensuring your business is strong will position you well to capitalise on future growth.
Having all your eggs in one basket helps to focus on what is the best you can offer in terms of service as a roofer or builder.
Most companies in the field would even go as far as listing what services they offer, to funnel the type of work they are capable of providing. This is a safe and comfortable approach that does generate work but can limit expansion and growth.
Many successful companies (both Large and Small) have only established themselves after a few trials in different divisions of their work.
It is through diversity, and stepping out of the comfort zone, that one could find hidden abilities or niche markets that could become the signature service of a company.
Roofers should consider expanding services beyond just roofing. For example, you could offer gutter cleaning, roof painting, skylight installation, or other related services.
Are you really good at standard corrugated roofs? Why not try your hand at architectural panels? Are you used to dealing with large residential projects, why not give it a go at some commercial work?
If you have the manpower, knowledge and will, why not maximise and profit on your existing resources?
Another great strategy for growth is to think outside of the box, and in this case the ‘box’ is the area you are currently servicing.
Demand for houses has received a permanent boost since the pandemic, and the flight to regional NSW from larger urban areas is also likely to benefit detached house building over the coming years.
As we face the mounting global and domestic challenges of 2022, the statistics for regional Australia tell a positive story. Our regions, home to one in three Australians, are growing. Between June 2020 and June 2021, regional Australia’s population grew by 1.0 per cent or 80,040 people.
In comparison, the combined capital city population declined by -0.3 per cent, or 47,250 people. In the year to July 2022, regionally-based industries including agriculture, forestry, fishing and mining - made up 72.2 per cent of the value of Australia’s merchandise exports - and as a rule where there is money, there is work.
Regional Australia, with such a vast area - and governmental plans of further regional development - is full of business opportunities everywhere, so why not entertain operating in regional areas instead of missing out on great chances of getting more work in areas with less competition and higher demand for good service?
If you are only offering services in a specific area, consider expanding your service area to reach more customers. This can include targeting new suburbs or even expanding to new cities or regions.
It is difficult to know about what is going on in the country if you are only focusing on the coast. Remember all councils have their own agenda, with their own budgets and projects.
There are opportunities for work inland, on the coast, in the mountains and so forth. If you don’t mind travelling, you are already a step ahead of most other stagnant companies that will miss out on business.
The home renovation sector presents a promising opportunity to expand and diversify your business, particularly as it is forecasted to show growth in the residential market over the next two years according to MBA Australia.
This sector allows you to leverage your current skill set by targeting projects such as home extensions, gazebos, pergolas, carports, decks, and skylights. By tapping into this market, you can expand your customer base and revenue streams while remaining aligned with your existing expertise. This can create a more stable and adaptable business, positioning you for long-term success in the construction industry.
And with tight budgets, many homeowners might be considering utilising existing space - like creating attic conversions - or even trying to generate income by investing in granny flat or studio additions to rent out. This is another field of interest for many builders and should be in the radar of companies looking for expansion in different areas of service.
Investing in marketing to increase your visibility to potential customers will also help you to diversify work as clients get to know about your business and what you do. (Keep your eyes out for our June edition which will be focusing on this topic.)
Another great way to expand both your service offering and expand your territory, is to form partnerships. These partnerships could include other businesses such as:
- Property Managers & Real Estate Agents - having a repair and maintenance division can provide regular work that can help to fill in the gaps. With your experience, you could offer your services to complete repair and maintenance work on skylights, fascia & gutter, polycarbonate roofing and of course metal and tile roofs.
- Home builders can help you expand your customer base and generate more leads. In addition, they may well be very receptive to having a roof installed that comes with a professional warranty from your company.
- Teaming up with a Carpenter and offering a full Skylight installation service
- Council work - Remedial and maintenance work for council is a great way of having ongoing work, which helps with cash flow and gives flexibility for companies managing larger staff numbers.
One last thing to consider is networking. It is important to ensure that your company remains actively engaged in networking to be able to seize opportunities as they arise. Frequently, people are approached at social events with job offers or prospects, and it is crucial to be prepared.
This can be achieved by being opportunistic, keeping business cards handy, projecting a professional image, attending industry events, and maintaining an active presence on tender databases such as EstimateOne, BCI Central and Cordell. By doing so, you will stay informed about upcoming projects and be well-positioned to take advantage of them.
By complementing your networking efforts with diversification, your company can establish a strong foothold in the construction industry. As you expand your services, you will attract a wider range of customers and increase your revenue streams, thus becoming less reliant on any one area of expertise.
This will allow your business to adapt more easily to changes in the industry, as you will have the flexibility to pivot your focus and take advantage of new opportunities.
Ultimately, combining networking and diversification can create a more dynamic and resilient business that is well-equipped to succeed in the ever-changing construction market.
It's important to evaluate the potential impact and cost of each expansion strategy before implementing them. Consider consulting with industry experts or business advisors to help you make informed decisions about the future of your business.
Stay tuned for our June issue: Increase your marketing efforts