Seven business tips for rampant times
The Bibby Financial Services study found that 44% of contractors experienced a shortage of skilled labor and nearly half (46%) paid more with existing suppliers for the services and materials they needed. they need.
The good news is that the sector remains resilient. In fact, the latest construction PMI showed an increase in overall new order volumes, the strongest since August. This is an even more impressive achievement when December is usually one of the quietest months in the industry.
Despite this healthy pipeline, the cost of doing business is a big challenge. Rising fuel, energy and raw material prices continue to create financial charges. If businesses are to succeed and take advantage of opportunities, they are going to have to learn to live with and adapt to the challenges created by the pandemic. Fortunately, there are several steps they can take to mitigate risk and manage disruption.
Here are several steps contractors can take in the coming months:
Review your pipeline. Labor and material considerations are critical to success, so ensuring there is enough will mean the job can be done efficiently and on time. Without action, companies risk losing the momentum needed to get the job done or, worse, they could end up with unprofitable projects.
Map your supply chain. Determine if there are any potential risks in your supply chain that could cause disruption. It’s also a good idea to shop around to see if other vendors might hold more stock at lower prices. For example, four in ten (40%) have sought out new suppliers, while a quarter have either found new suppliers (25%) or renegotiated with existing partners (24%).
Make commodity prices central to contracts. Negotiating contracts to account for fluctuations in the price of raw materials will save you from being stung later if the cost of materials rises sharply. This is particularly important for almost a quarter (24%) of companies in the sector who admitted to not always thoroughly checking the contracts they sign.
Plan your financing. Make sure the right financial support is in place to give you the flexibility to react to sudden changes. Knowing you have financial flexibility can mitigate unforeseen costs or challenges. Unfortunately, some still rely on emergency forms of finance with a quarter (25%) using bank overdrafts and 22% relying on loans from friends or family, as well as unsecured forms of finance like personal finance such as than credit cards (13%) . It is far better to have a secure form of financing in place than to have to rely on emergency measures.
Have good billing habits. Cash is the lifeblood of any business and prompt invoicing will increase the likelihood that you will get paid sooner and reduce the risk of late payments or even bad debts that could impact your cash flow. However, almost one in five contractors (19%) still wait more than 30 days to receive payment once the invoice has been invoiced. Billing on time will help your cash flow. View reporting requirements for business payment practices by clicking here.
Finance or cash? Sometimes your business will need to invest in specialized machinery or equipment. When this happens, it can seem like an expensive investment. Shop around for financing like asset financing or leasing before you commit to spending your money.
Seek outside help. Like any business, business owners can take steps to position themselves for growth, but businesses must remember that they do not operate in isolation. Construction companies face unique challenges that can impact cash flow and impede growth. Our research found that on average companies negotiate up to 40 contracts a year and one in five (20%) have been negatively affected by unfair penalty clauses. So, seeking expert help can ensure your business gets the support it needs to grow. Whether it’s helping with tough contracts, financing, or staff training, your business will be stronger with the right partners on your side.
To learn more about unlocking funds within your business and maximizing your cash flow, click here *Research taken from Rebuilding Growth 2021, Bibby Financial Services
This article was written and paid for by Bibby Financial Services