The profit levels of many builders and larger construction companies are too low to sustain long term growth. Risks are high and statistics show that over time net profit levels are barely above break-even. The industry seems to operate like the not-for-profit sector. Do you know what profit you need to achieve for your long term success, or even survival?Details
I attended Geoff Hardy’s builder breakfast recently on the topic of retentions. Consensus was, they are a good thing to avoid (retentions, not the breakfasts), but in many commercial situations you can’t avoid them. Apart from having to wait months to earn your profit in the job in some case many sub-contractors are left with retentions unpaid when the main contractor goes under. This is caused by the retentions not being held in trust and are used to pay others (which is illegal).
Despite directors and senior management breaking the law in this matter, MBIE seem reluctant to bring criminal charges against head contractors. Perhaps because intent is difficult to prove. So what can you do as a sub-contractor to protect your self? Read on….Details
With the construction industry being in a fairly buoyant state at the moment the apparent need to focus on marketing does not seem to be a high priority. This may appear to be the situation on the surface, but ignoring it can lead to a roller coaster of leads coming in and result in a feast or famine of work in the longer term. Why not take the opportunity to proactively refine your marketing and provide a solid lead generation machine of your ideal projects? A corner-stone of this is the strategy of niche marketing.
Niche marketing, or specialization is used by industries of all types because doing a few things with a high level of expertise will bring recognition and a reputation of excellence quicker than doing many things well. Read on to see how you can choose a niche for your business and the benefits it brings.Details
One of my core values in what I do is to help my clients improve the profits that their business generates. This starts with some basic education into the various levers that you can pull on in your business to increase revenue and reduce waste in your business. This video starts to look at those levers and how they can be worked together to improve gross profits, and thus improve your life as a business owner.Details
You probably didn’t go into business to read financial statements. You went into business because you are good at your trade and thought owning a business was a better way to make more money. Never-the-less part of owning a business in the construction industry is learning how to monitor the performance of your business so you can know when changes are needed. That’s best practice anyway. This video is about three financial reports you should become familiar with to better manage your business.Details
Team New Zealand has recently launched their AC75 rocket ship, Te Aihe. It looks like something designed by an Italian super car manufacturer and will probably have the power to match. They anticipate reaching speeds of around 50 knots when up and planing on it’s high-tech foils, which is mind blowing. The only problem is at that kind of speed, things happen real fast and there is limited room for error. If things go wrong, they will go wrong quickly and probably spectacularly.
The same principles apply in business. The faster your business is growing and trading, the less room for error there is as things can go sideways very quickly. This article will help you manage a fast growing business better.Details
Whether you have a high-touch, personalised sales method, or a more automated, templated one, the ability to take a new enquiry through to the point of sale is vital to the sustainability of your business. Without sales your business will die; it’s that basic. Sales are the lifeblood of any business and yours is no different. So how do you improve the percentage of enquiries that turn into paying customers?
There are many moving parts to this process but having a really good start to the sales journey for the prospective customer is vital. Start right and your chances of securing the sale, even at a premium price is higher. Of course the reverse is also true. Start out wrong and you will probably never make the sale. Luckily the first few contacts you have with a prospect is also the easiest and the cheapest place (in terms of your time) to make improvements to your sales conversion rate. It is also the most efficient place to qualify someone OUT of your sales process and thus waste the minimum amount of your time. Time is probably your most valuable resource in your business and so you need to protect it and spend it where it is has the greatest payback.
The first few contact points you have with a prospect are likely to be a phone call and then some sort of scoping meeting. It’s vital to make these early touches as professional and as powerful as possible. You need to start building rapport and trust as soon as possible (for those prospects you haven’t qualified out), and I have listed a few hints and tips to help you refine your processes here.Details
In the battle to improve field profitability there is an important debate to have. Do you focus primarily on Productivity or Efficiency? Although both terms seem similar there is an important difference and one that will shape your overall business response, depending on which one you focus on.
Productivity is all about packing in the maximum output in a given time. It has a quantity focus. Efficiency focuses on looking at a fixed amount of work (in a project for example) and aiming to do it with less wasted time. It has a higher weighting on quality. The ultimate situation of course is to achieve BOTH increased productivity and increased efficiency, but it’s a fine balance to get right.
Most of my clients aren’t in the mass production market segment and so focusing on improving efficiency first makes more sense. There are many ways to improve efficiency but one strategy that is easier to implement now than it ever has been is through better use of technology.Details
According to Nicholas Bloom’s Harvard Business Review article, “Corporations in the Age of Inequality,” a slim percentage of top-earning companies actually earn significantly more profit than their rivals in what’s been deemed the “winner-takes-most” economy. As leading companies earn more, there is less profit remaining for lagging companies, only widening the gap.
So, what does the construction industry in particular look like? In research between the Construction Financial Management Association (CFMA) and Coltivar Group, a representative sample of 363 industrial and nonresidential U.S. construction companies ranging from $1 million to over $1 billion in revenue were studied. Profitability and return on investment were used as an objective lens to compare the companies.
While 50% of companies had a competitive advantage, defined as the ability to earn above-industry-average economic profits, the calculation revealed that companies in the top 20% earn nearly 83% of all economic profit, fulfilling the Pareto principle, or the 80/20 rule. The remaining 80% of companies are confined to the dog-eat-dog environment of the lower deciles, where they contend for leftover scraps of industry profit.
How did these successful contractors achieve the initial success to advance up the curve?Details
A recent study conducted by BRANZ has shed light on mental health issues within the construction industry, offering some important insights to help tackle the issue
At 6.9%, the proportion of suicides in the New Zealand construction industry stands as the highest across all other sector in the country.
Despite a mixed reaction from interviewees being surprised or not surprised at the rate of suicides, nearly all were unaware that the construction sector had the highest percentage of all industries.
What’s fuelling the numbers?Details