5 factors to consider if planning for growth in 2017

There are indeed interesting times ahead for the trades and construction industry. The resources boom has passed and residential building is tipped to have peaked. The latest industry forecasts illuminate a potentially turbulent next ten years, as the Australian economy re-calibrates from an extraordinary peak. Some sectors are now set to experience a fall in work demand of up to 40% over the coming years.

The outlook however is not all bad. According to the Australian Construction Market Report & Forecasts, recently released by the Australian Construction Industry Forum (ACIF), the dynamics of business and public spending, has seen some expenditure move between sectors, rather than fall away entirely.

Residential Building as a sector will continue to rise until 2017-18. However there is perhaps little surprise that, “due to saturation of demand, the sub sector featuring apartments and townhouses is forecast to begin a fall of up to 40%.”

For many operators, some cooling of the industry may be welcome, freeing up supply of skilled trade workers and sub-contractors. Industry groups and operators alike, share concerns over the current training structure being a choke-point for quality skilled workers across most trades.

With the pitch report presenting cracks for some and an opportunity for bounce for others, here are 5 factors linked to resourcing options, that might help shape your strategic plans for 2017.

  1. Demand

It is important to keep abreast of industry reports and trends that effect your sector, however low interest rates will continue to provide broad stimulus for development demand. Being nimble and flexible, in your operational infrastructure as well as capital asset commitments, is critical when traversing boom & bust cycles.

When thinking about scaling up or down to meet demand, administration capacity is often a challenging consideration. Each additional role is typically a $50k plus commitment, plus each extra person requires at least 20% of some other persons’ time in induction, training and supervision. Many large companies now outsource a wide range of administrative functions, keeping core resources focused on core business. Outsourcing is a highly flexible option, providing access to the latest specialist technology, without creating sunk costs in non-core infrastructure and additional headcount.

  1. Cashflow

An announcement released 16th November revealed, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), together with the state Small Business Commissioners (Victoria, New South Wales, South Australia and Western Australia) will be conducting an inquiry into the payment practices of big businesses and governments over the coming months. The inquiry is aimed at looking into patterns of behaviour that are undermining the financial viability of small businesses and putting pressure on the entire economy, and will also be carried out in association with the Council of Small Business Australia (COSBOA) and the Australian Institute of Credit Management (AICM).

Again, apart from being across industry trends, it is important that businesses adopt strong end-to-end systems and communication measures, to minimise discussions and excuses that impact prompt payment of accounts. Current mobile workflow automation systems, provide full terms & conditions attached to each quote, with mobile digital sign off of acceptance. The same systems also enable real-time updates of all time and materials costs, along with variations reporting and photos of issues or exceptions on site.

These tools remove many of the gaps that delay payment. They improve the performance transparency of sub-contractors and staff, and they help identify client-side issues and amendments that impact time and costs on site. As well as looking at money coming in, taking a strategic approach to fixed overhead commitments, is also a key area of focus for cashflow management. Most have strategies in place to redeploy field teams during gaps between projects, but office administration is an  overhead that doesn’t generate income. Fixed overheads require strategic consideration in cashflow planning, because they represent a commitment that often cannot be quickly or easily adjusted in response to month-to-month income.

  1. Skill-set

Sometimes you just need to take an honest look at your organisation and ask yourself; what are we really good at? What do we do well and what is not part of our primary skill-set. To grow you must focus resources around core strengths. That sometimes requires cutting away or re-organising elements of the business that are holding you back.

Financial and office administration is a critical skill-set, that until recently has been strongly talent-based. Small to medium sized businesses always run the risk of becoming dependent on one key person, the office hero who is the knowledge-base for the raft of systems that make the place tick. Cloud based applications now offer end-to-end, integrated business process automation across marketing, operations, communications and accounting. Digitised data capture enables process automation, with information integrated and accessible across a variety of applications and platforms.

Specialisation and use of technology in administration resources, now offers management and client dashboards, with real-time transparency and end-of-day reports. Building Management and Strata companies are implementing paperless administration. These systems feature job-board work scheduling, seamless safety checks and document administration, automated work orders, time & materials approval and accounts payment processing.

  1. Attitude

The current Governor of New South Wales, retired General David Hurley is credited with the line; “The standard you walk by, is the standard you accept”. It was apparently initially made in relation to gender equality, but I think it is appropriate to most aspects of life.

It presents a tough standard in business and one I sometimes struggle with, in respect of team performance and the attitudes of workers and sub-contractors I employ. It can be so hard to get good operators, that you often feel you just have to accept what you can get. However, you cannot grow a business, without great people. Conversely, poor recruiting decisions will drag your business down every time.

Corners cut, things fudged, dodgy time sheets, constant excuses. It saps time and energy out of each day and costs the business plenty. Ultimately everyone is left covering their arse, team moral drops and quality suffers. To monitor this, I once created a time code in our job costing system – FUSU: Fix Up Stuff Up! Then instead of time just being considered part of the job, we could see for each job, how much time it cost us going back fixing up poor execution. Once you can monitor the cost of issues, it does not take long to root out the source, so wasted FUSU time can then be eliminated.

Being in charge means making tough and smart choices. Poor systems can also cause FUSU time. To grow your business, you must have systems in place that clearly communicate work requirements and provide transparency on performance. As new systems are adopted, more often than not, those that complain or avoid using the “new app”, are concerned by the accuracy and scrutiny it provides.

  1. Serendipity

My dad always said, “The harder you work, the luckier you get.” I consider lotteries to be about luck. Other fortuitous events often have something else at their roots. I like the word, “serendipity”. Google lists its definition as; “the occurrence and development of events by chance in a happy or beneficial way.” Getting your business into a position to have a chance at something, is not about luck. Steven Bradbury at the Salt Lake Winter Olympics 2002, is a perfect example of someone who had trained hard to become top ten in the world. Then, on one day when it mattered, it became his turn.

Small businesses often contain highly talented groups of people, who are capable of great things. Competition from bigger, better resourced players is always challenging. Yet, if you can create the right environment, nurture the right attitude and conditions, then you can hardly call it luck when things start to fall in place. Focusing on the factors that support consistent execution and performance, earns the chance to be in the race. From that point it becomes right time, right place.

 

2 Comments

  1. The purpose of researching a market is to figure out how you can best attract those who are likely to buy your company s products or services. But what if the target market even isn t interested in, and has no need for the types of offerings that your company provides in the first place? This would be a waste of time for your marketing efforts. So consider this as the first of market research factors to research.

    • Rob Keogh says:

      Correct Easton. Assuming there is a market is the first error of many new ventures. Predicting where a market is going, whether up or out, is also key when planning your next moves.

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