After disaster comes the rebuild
On the back of recent natural disasters, the construction industry is about to experience a significant boom. Is your business ready to tackle an increased work load?
By Paul Rattray.
The past six months or so has been a particularly challenging time for a lot of Australians.
Our hearts go out to those Aussies affected by the devastating bushfires, and the more recent floods. Some statistics suggest that as many as 75% of Australians have been affected by natural disaster.
For the victims, there is now a long road ahead, as they recover and face the enormous task of rebuilding in order to move forward with their lives.
There’s no doubt that on the back of these natural disasters, the construction industry is about to experience a pretty reasonable boom. Trades of all kinds are going to be in hot demand over the coming months.
Managing the unexpected ‘business boom’
So, with that in mind, now is a good time to talk about how to manage this kind of unexpected rush when you’re a small business.
It’s more than likely you’re not prepared, because this was not predictable.
Chances are you won’t have an army of apprentices or qualified staff you can call on right now. A skill shortage is likely. And it’s probably quite impossible at this point to accurately determine what you need, or how long the ‘boom’ will last, so the pressure will seriously be on: On your workflow, your own time and capacity, your decision-making, your existing team including your admin staff, as well as your systems and processes.
Which brings us to point number one…
1. Don’t over-extend
The temptation is always to ‘make hay while the sun shines’. But saying ‘yes’ to every job that comes your way, and then not being able to deliver puts you in a very precarious position.
Really consider what resources you have, and what you can draw upon immediately. Look at casual labour options, and contract positions. Don’t forget that you can access pay-as-you go virtual CFO and accounting as well as general reception and secretarial services. This can ease the burden. Ask existing staff if they want extra responsibilities or extra hours right now. They may well rise to the challenge. Just factor in pay increases and additional training, if required.
Always get professional advice regarding employment conditions and regulations. Employment law can be a minefield. If you’re taking on extra people or promoting others, even for a short period, does that affect your business insurance policies? These are all worth checking.
Remember that your business reputation is built on the standard of your work. It’s wise to be choosy and not to take on more than your business can comfortably handle.
2. Consider collaboration
When there’s a lot of business coming your way, you really need to asses each job carefully and work to your own strengths. At this time, one option is to consider whether you can collaborate with another local business to share the load.
Partnering can be an ideal way of ensuring that you have the capacity to fulfil work obligations.
A long time ago, business was conducted on the strength of a gentleman’s handshake. But really, unless you have an agreement in writing, that’s been checked by a lawyer, then you’re putting your business at risk. The agreement doesn’t have to be complicated, but make sure that it has enough clarity so that each party knows where they stand, and what the partnership is intended for, and build in some flexibility around a re-new date. Have clear expectations about what each party will contribute, and how they will be remunerated.
Of course, less formal arrangements are possible if you have trusted peers in the industry, simply recommend them for jobs more suitable to their skill set, and ask for the favour to be returned.
3. Keep up with the admin
This is not just about generating invoices and collecting income and ensuring your cash flow can adequately handle a period of rapid growth, it’s also about ensuring that your whole business has robust systems and processes in place.
There are some fantastic project management apps allowing you to monitor jobs, juggle deadlines and keep an eye on quotes, budgets and spending, all from your smartphone.
Remember that the entire industry will be under significant pressure, too.
It may not be ‘business as usual’, for example: Some building supplies may be limited, you might not be able to access big waste bins for onsite. Deliveries might be slower than usual. You’ll need to get innovative and think how to solve these issues if they crop up.
Get your quotes as accurate as possible in the circumstances. Don’t rush, or make rash judgements that could affect pricing.
4. Don't forget the tax man
This is a big one.
You should, by now, also have Single Touch Payroll set up so that each pay cycle you report to the ATO employees’ salaries and wages, allowances, deductions (for example, workplace giving) and other payments, as well as pay as you go (PAYG) withholding and superannuation information.
If you’re not doing this, at ATB Partners, we currently offering a $500 solution to get you up and going, but you need to be using cloud-based accounting software, for example Xero. *
Also, remember to put away ample funds for your own tax, particularly the quarterly Business Activity Statement (BAS) tax. Because BAS is linked to income it is not easy to predict or plan for.
5. Be prepared for every job
Make sure also that you brush up on the latest building codes and any other legal aspects or local council planning considerations for the jobs you take on. For example, after recent fires there has already been talk about strengthening building codes in vulnerable areas. Does this affect the job at hand … and have you planned accordingly?
Also consider that many of the jobs you undertake after a natural disaster will be subject to insurance claims. It’s important that you have strict payment terms and conditions, and that you make arrangements to be paid, irrespective of clients’ insurance claims.
The simple reason for this is that insurance claims can sometimes take months to assess and process (the insurance industry is being inundated right now) and your business won’t survive if you’re also waiting months to be paid. It goes without saying, don’t get yourself into a debt mess with suppliers.
6. Communicate!
It’s important to keep in mind that at the end of the day, clients just want the job done, to standard, and as soon as possible.
Right now though, under the circumstances, some of them might need a little more hand-holding than you’re used to. Empathy is important, but communication is vital. If there are problems, or hold-ups, then communicate! Be open and honest and seek to work with clients to decide the best solution. Advise of all changes … including estimated waiting times or potential changes to materials or your original quote.
Most clients don’t understand the jargon in your industry, (and don’t necessarily care to learn – but they don’t like surprises either! ). They’re looking to you to provide a professional, reliable service.
Adversity can bring opportunity
What lies ahead is real opportunity. Not just to capitalise on high demand but to take advantage of potential exposure to different clients, and potentially different types of projects than may ordinarily be your businesses’ ‘bread and butter.’
How you handle the months ahead could provide your business with a growth spurt that will take you ‘next level’. But you need to plan, manage and be adaptable.
Most importantly, you need to take care of yourself. Times like this can be stressful, and stress leads to burnout, so don’t make the mistake of pushing yourself or your people too hard.
And if we can help, contact us.
*Conditions apply
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