Australia’s construction sector is experiencing unprecedented challenges but the right tools can help your business stay on track

Another week, another construction company hitting the wall. Last month [August 2022] saw Queensland’s Oracle Homes collapse into administration, the latest in a long line of Australian residential builders to do so this year.

They include the likes of Probuild, Pivotal Homes, Next and Snowdon Developments, once profitable builders that found themselves unable to square the circle, ie. complete fixed price contracts in the face of soaring material and labour costs.

Other firms are likely to follow suit. In late May, the Master Builders Association of Victoria told The Age the industry was in the midst of a ‘profitless boom’, with the vast majority of that state’s builders experiencing challenges to their profitability, as are their counterparts elsewhere in the country.

Desperately seeking skills and supplies

It’s certainly true that having a full order book – in today’s times, what trade business does not? – is no longer a reason to sleep well at night. Not when finding qualified people to complete the work has never been harder.

The Housing Industry of Australia raised the alarm late last year. Its November 2021 Trade Report flagged the fact that the construction sector was in the grip of its most severe skills shortage since the Report’s inception in 2003, with significant shortfalls in all skilled trades and all regions.

Materials too – everything from timber trusses to tiles – are in short supply; hence the across-the-board increases in prices. In the year to March 2022, steel beams and sections were up 41.5 per cent, structural timber by 39 per cent, plastic pipes and fittings by 26.5 per cent and metal roofing and guttering by 19.9 per cent, according to the Master Builders Association NSW.

Cash flow crunches

When making money is hard, collecting it can be even harder. Australia’s construction sector has earned itself a reputation for not paying the bills on time and since the pandemic struck, payment times have deteriorated, according to analytics provider Ilion.

It’s a rare trade business owner who hasn’t had the unpleasant experience of sweating on an invoice, in some cases for several weeks after it’s come due, and hoping like hell the customer in question is good for the money.

In today’s times, that’s far from a given. When construction firms go broke, customers and subcontractors share in the misery; the latter sometimes to the tune of tens of thousands of dollars. Firms that aren’t on top of their payments and cash flow can be themselves pushed to the wall and every new customer needs to be risk assessed as a potential defaulter.

Shoring up your operations

Tricky times indeed and, as a trade business owner, there’s very little you can do to mitigate them. Material and skills shortages are beyond your control and so are broader economic factors, such as interest and exchange rates, and consumer confidence.

But you can strengthen your firm’s position by becoming more organised and achieving better visibility over your finances.

Many tradie types have plenty of room for improvement on this front. Typically, they’re guys and gals who’ve parlayed skill on the tools and a stellar work ethic into a small or medium sized business which they’ve learnt how to run on the fly.

Lack of insight into how jobs are tracking financially, until tools are downed and bank balances checked, is common. So are long hours spent catching up on paperwork at night or on weekends.

Tools to make the task easy

If you’re nodding along ruefully at this point, I have good news. It’s possible to get on top of all these things and run your trade business like a true boss, using construction job management software that won’t cost you the earth.

It can be configured to automate your quotes, timesheets, job scheduling, invoicing and back costing, and linked seamlessly to Xero, MYOB and QuickBooks – the accounting packages of choice for most Aussie tradies.

It takes the hard work and hassle out of running your business, by making it easy to price for profit, control your costs, and keep on top of compliance and financial management.

It’s user friendly and priced to please, with no lock-in, monthly subscriptions for most trade businesses coming in at around the cost of a case of beers.

A solid foundation for success

Having a better idea of how your jobs are tracking, operationally and financially, can help you to head off cost blow-outs and cash flow crunches. And the hours you save on admin each week can be spent on value adding work, whether that’s toiling on site or winning new contracts.
At a time when turning a profit on the tools has never been harder, it’s an investment in your enterprise that will pay you back in spades.

Published On: September 13th, 2022 / Categories: General Tips, Job Management / Tags: , , , /

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