If COVID has taught business owners anything it’s that all you can control in your business is the financial management tools you have currently within your business and ensuring that you have a tight handle on your financial situation.
To ensure you are doing this, we recommend you start reviewing your business NOW in the below four significant areas:
What does the next 12 months look like in your business? We are talking with many in the construction industry and many are experiencing the flow on effect of:
i. Contracts put on hold due to loss of work
ii. Influx of quoting but inability to convert due to financing difficulties
iii. Time delays with planning approvals
All these factors have a significant impact of the financial position of a business. Can your business survive if you have a delay in work starting or being put on hold?
b. Creditors (Accounts Payable)
Non-payment of creditors is a significant risk in the construction industry as it means imminent cashflow issues in the business and risks with QBCC non-payment complaints.
If you have difficulties with the payment of creditors, what do you currently have in place to rectify this?
3 simple things to look after your creditors could be:
i. Talk with them and explain the situation
ii. Ask for a specific timeframe of payment
iii. Advise your next steps if they aren’t able to work out a payment arrangement i.e Debt Collectors
c. Financial Reporting
Are you getting the best information from your Financial reporting packages or is it the last thing you look at to make business decisions? Programs such as Xero and MYOB have invaluable reporting available to provide you details as to your profitability per job, that you can then use to help with your quoting and monitoring of business performance.
For many it will not take a significant amount of time to set up this reporting which could save you thousands of dollars of lost profit in the future.
When work is busy, businesses generally have all hands-on deck to complete the work. Likewise, when we are slow employees/contractors are generally fill in their time to preserve their jobs and positions.
An area that can heed great results in a business is the power of compounding. That is looking at your systems and processes to save time which in turn saves dollars.
Did you know that if an employee at $25 an hour saves 5 minutes a day that is a $500 saving to the business over a 12 month period. Compound that over the number of employees and you have significant savings.
We have been working with one of our building clients recently and they have proved the savings was not only the dollars in time but working with the sales and estimating department with the ability to send quotes earlier resulted in an increase in conversion of sales.
If you require any further assistance with reviewing your building business, please don’t hesitate to contact our office to organise an appointment with one of our Directors on 07 5451 1118.