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 complete fixed price contracts in the face of soaring material and labour costs.
Desperately seeking skills and supplies
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.
Cashflow 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.
And 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 cashflow 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 that 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
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 hassles 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 beer.
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 cashflow 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.
