BUILDING MATERIALS GOING “THROUGH THE ROOF”
The pandemic restrictions may be over but unfortunately that is not the end of business disruption in the building and construction industry for you and your business.
Building material prices have soared during 2021 and there is the possibility of further increases to come. This coupled with supply shortages, has really made a significant negative impact on your margins.
Depending on your stock of required materials the delay in projects only further compounds the problem and squeezes margin tighter.
In an already margin-contracting industry, this could be a problem that may be difficult to recover from.
So… what is the answer to the problem ..??
You could look to operate on a cost-plus contract but not all clients are likely to agree to such an arrangement.
You could add price escalation clauses in contracts, but this is less common in residential projects.
You could allow for the contingency of price increases, but this could price you out of the market.
All of the above options will have to be assessed on a job-by-job basis, so neither of us can confirm whether they will work but should definitely be considered.
With a longer-term view in mind, establishing strong relationships with reputable suppliers will be critical as it will give you greater certainty moving forward.
A Builder’s crystal ball and plan…
Even more important is to plan / budget / forecast your numbers so you know what is ahead or at the very least have an idea based on your pipeline, your network, your history and your knowledge.
Of course, you would likely expect an Accountant to suggest this and, I’m glad I did not let you down..but I say this not because I am an Accountant, but because I am a business advisor that has worked hard to support many builders, contractors and developers over the last 20 plus years.
Without fail, those that closely manage their financial position are better off. We advise all our clients to automate their systems and accounting operations to enable seamless and accurate data and planning
Accurate and timely numbers do not lie and they will tell you everything you need to know – good and bad so you can make informed business decisions as you need to.
Once you get on top of this part of your business, you will begin to achieve the maximum financial benefit that your business allows.
Don’t waste the hard work you put in.
Don’t operate on gut feel.
Don’t ignore the numbers.
Please reach out for a ‘no obligation ‘chat to find out how we can systemise your business for 2022 and beyond.
Tony Dimitriadis B.Bus CPA Director
Our renowned coaching programs will allow you to:
- Work fewer hours — and make more money
- Attract and retain quality, high-paying customers
- Manage your time so you’ll get more done in less time
- Hone sharp leadership skills to manage your team
- Cut expenses without sacrificing quality
- Automate your business, so you can leave for days, weeks, or even months at a time