How does a small construction business plan in volatile times?

The construction industry is always a volatile sector whatever the economic circumstances but figures released over the last couple of weeks have been particularly so.

One survey (from Markit) showed a surge in house building in June, along with an increase in the number of workers being taken on by building firms.

Just a week later, figures from the ONS (Office of National Statistics) seemed to contradict this with a reduction of output by 1.1% in May and indications of a slowing in growth.

While the months being surveyed do not precisely match, this illustrates the difficulties for those working in the sector as self-employed or sole traders, effectively as micro businesses, who need to plan ahead.

As small businesses, many builders lack the security of future orders which relates to them reporting difficulties with securing finance, problems getting credit for the supply of materials and labour shortages due to their own fluctuating demand.

For all small business, being able to forecast and manage cash flow relies on market research and is an essential part of planning for both stability as well as growth.

The building sector has been characterised by many firms paying for the last job with income from the next job. This cycle clearly catches up with those firms when the next job is delayed or cancelled.

While stressful to be stuck in such a cycle, it can be resolved but needs either an injection of cash, or the assistance of a restructuring specialist. The initial advice is normally free but rarely solicited.

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