Cash flow and finances
- Cash flow is king. Reduce unnecessary expenditure (both operational and capital expenditure) to have the ability to pay bills on time.
- Look at how you can improve your financing structures by engaging with existing and/or new financiers. You may be able to take advantage of better debt and capital structure options available in the market.
- Monitor your sales pipeline, margins and forward cash flow carefully. If your forward work reduces, consider the adjustments you can make to ensure there’s no strain on cash flow.
- Stress-test budgets and cash-flow forecasts against different scenarios and mitigate potential future risks.
Growth
Always be looking to work on new client relationships and opportunities. It can be easy to fall into a niche, but exploring different projects and sectors could open up new revenue streams.
It may be necessary to make staffing cuts to remain competitive, but don’t cut your business so much you cut muscle. It’s important to have the right staff to be ready for an improvement later in the year.
Maximise any downtime to work on your business so that you’re better prepared to capitalise on opportunities as the market recovers. This includes securing available talent, working on systems and processes, and developing appropriate governance structures.
Workload
- Focus on where your work is coming from and what part of the sector you want to be in - and be prepared to flex according to the market. Diversify to ensure you’re not over-reliant on areas such as Government contracts.
- Examine your business and understand your unique selling points. Consider different ways to stand out from your competitors to win tenders.
- Reputation is everything. Make sure you keep your standards and quality high, even in tough conditions, to help win work over competitors.
- Think about your limits on margins. Lower margin work can keep boots on the ground and keep staff motivated, so long as the job is managed efficiently to maintain the margin. Taking jobs at too low a margin can have a big impact on cash flow and take your focus away from other jobs that may be more profitable, so it’s important to find the balance.
Staffing
- Focus on retaining key senior staff through providing opportunity for development, ownership, and better pay. Retention of quality people is key in this market – you will need them when conditions improve.
- To retain good employees, take the time to upskill your staff to boost their motivation and plug future talent gaps.
Paperwork and planning
- Stay on top of your compliance. It’s a necessary evil that can cost you time and money if you don’t get on top of it.
- Have a plan, supported by numbers, showing you different scenarios and what the way forward looks like. Then ensure you know what levers in your business you can pull to navigate different situations.
- Use any downtime to your advantage, especially when it comes to future-proofing against the threats of AI and climate change. Consider how AI could be an opportunity for your business, especially when it comes to maximising efficiencies.
Finally, communication is essential, no matter what stage and environment your construction business is operating in. Keep your business stakeholders (shareholders bankers, creditors and Inland Revenue) abreast of where you’re at and if cash flow is tight, communicate with suppliers and other creditors early. It’s important to take professional advice, especially if the going gets tough. This includes lawyers, bankers, industry bodies and your accountants.
