How to have a successful building firm even when times are tough
Monday, February 12th, 2024
Of course you want your building firm to be successful in tough times as well as in the boom times. But how? It feels easier said than done. The world is looking shaky right now. Geopolitical tensions, global crises, economic uncertainties… the landscape for building firms is anything but stable. From the complexities of Brexit and conflicts in regions like Ukraine and Gaza to the lingering effects of the Covid-19 pandemic and the challenges of inflation, the road to success for residential building firms is fraught with obstacles.
Continuing with my doom-mongering, according to an article in Construction News, in 2023 the building sector had its highest annual number of company collapses since 2009 and the global financial crisis. Clearly some building firms are finding it tougher than others. It’s all about survival of the fittest. So let’s make sure you have the right gear. With strategic foresight and effective management, it is possible to cope with the knocks and emerge stronger than ever. And keep it that way! It’s all about future-proofing your business.
While we can’t bring about world peace, the team at HBXL can at least give you the crash helmet or rather the software to help protect your business. It might sound dull but if your finances and admin processes are solid, you’re far less likely to feel the effects of any crash or downturn. So what do we propose? I promise to be upbeat from here on in!
1. Keep up with pricing
One of the biggest challenges facing building firms is the fluctuating prices of materials and labour. In the wake of Brexit and the pandemic, supply chain disruptions and increased demand have led to unprecedented volatility in pricing. It’s crucial for you to be across these changes and adjust your pricing strategies accordingly. Or you can leave us to help in that department.
Price Tracker+ is our secret weapon. It’s a strategic component of EstimatorXpress, the UK-leading estimating tool for UK building firms. The price of 6000+ materials across the UK are scanned and updated every month. It’s a monumental task the team undertakes checking our huge Price Book. But that’s all part of the Software & Updates package that comes with EstimatorXpress. We put in the graft so you don’t have to! A decent profit margin is nothing if it gets whittled away by inflated costs that you end up funding.
Of course it’s crucial to strike a balance. It’s not just about rising prices. You want to avoid overcharging clients when prices come down. So ensuring that your prices reflect the true cost of materials is essential either way.
2. Manage your projects effectively
In times of uncertainty, financial management becomes key. Most builders don’t start out in business with the intention of sitting looking at spreadsheets every day! So we’ve set out to make the admin side of construction as painless as possible. Changeable overheads, inflation and interest rates will test anyone’s patience. But you need to maintain a healthy cash flow to weather any storm.
EstimatorXpress dashboard. The dashboard in EstimatorXpress serves as the ‘mission control’ where you can access and analyse information related to your estimating tasks. The clever dashboard shows all your projects and automatically does a load of analysis to give you a visual overview of profit, cash flow, expenditure, work-in-progress and more. What type of jobs are looking the most profitable – so you know to do more of those!
The dashboard also gives you valuable reporting. Look at all the job details at a glance for the most profitable outcome. Get all the info on the job costs, the profit and overheads, plus the cost to the customer. Choose to view the cost by cash flow, build phase, trade, resource, subcontract type. It’s amazing what comes to light…
3. Plan, plan, plan
“Someone’s sitting in the shade today because someone planted a tree a long time ago.” Those are the words of Warren Buffett, the famous American businessman. You need to plan a future for your building firm. Where do you want to take it? Produce a business model for your business and that’s half the battle won. Instead of flying by the seat of your pants, you’ll be creating stability for your business long-term.
The EstimatorXpress Build Programme on the other hand, helps with the day-to-day planning. You automatically receive a build programme when you create the estimate in EstimatorXpress. Skimping on your planning leaves you open to costly delays and escalating expenses down the line – way beyond what you originally estimated. Remember, every minute spent on scheduling materials, plant and labour is an investment that shields you from unwelcome financial surprises. With EstimatorXpress you get ‘Just in time’ schedules of everything you need to order, and every subbie you need to book in well in advance – all linked to your ever-evolving build programme.
Materials Schedule. The software also automatically produces lists of materials required by order date and build phase. Give to your merchant early to get deliveries scheduled in, and negotiate a discount while you’re at it. You’ll be more organised and stand to save money. Same for your plant schedule and labour required.
4. Focus on efficiency and profitability
In times of adversity, efficiency and profitability become non-negotiable. The current economic landscape demands total accuracy. Your best ally – EstimatorXpress. It gives you latest material prices, inflation, wastage, wear and tear, and overheads. And that’s because you need to be producing accurate project estimates that reflect the realities of today’s market – not a discounted one that will leave you out of pocket. Yes, you might miss out on a job because you’re not as cheap as someone else, but why work on something that will keep you busy yet have nothing to show for it? Strive to operate a lean business, quoting accurately, managing resources thoughtfully, and prioritising projects that offer a favourable return on investment. By running a tight ship and making strategic decisions, you can absorb external shocks and maintain a competitive edge in the market.
WHAT NEXT? TRY ESTIMATORXPRESS FOR FREE.
If you want to be one of the building firms that will emerge triumphant amidst the prevailing uncertainties (this time and when the next blip occurs!) then you must want to trial EstimatorXpress!
Download a free 14-day trial and see for yourself the difference this clever tool could make to your business.
FREE BUSINESS-BOOSTING SKILLS BOOTCAMPS FOR BUILDING FIRMS
Want to increase your understanding the estimating process and how to manage your overheads, profit margins, cashflow and more? You could qualify for a free training workshop funded by the government, worth £3000+. The course includes the use of EstimatorXpress so it’s a win win!
