Warning: These Issues Could Demolish Your Construction Business

Every business has the opportunity for success, but the reverse is also true. For many businesses, failure is a real possibility. And do you want to know the industry most at risk of failure? According to these updated statistics for 2018, it is the construction industry. In terms of the five-year survival rate that is estimated for most new companies, only 36.4 % of those in the construction business survive. Scary stuff.

But why is the construction industry placed in such a precarious position of collapse? It is partly because of the issues that we will detail below. If you are in the industry, read them, heed them, and make every effort to save your business from disaster.

Issue #1: Cash flow

At the very outset, new construction business owners need large amounts of capital to get their operation off the ground. From tools to vehicles, the expense is high. Should work dry up down the line, or should it be slow to come by during the early days of business, there is the temptation to dip into savings to keep the business afloat, not only to buy more equipment for jobs that do come in, but to pay back the loan company where funds have originated.

To overcome this issue, business owners should always get the fairest loan possible so as to avoid huge interest payments. They should look for ways to cut costs, perhaps by hiring temporary workers instead of bringing in full-time staff at the outset, and by hiring equipment from companies such as the Freo Group instead of making those expensive purchases. And they should spend time marketing their business, ensuring enough people hear about the services that they offer. By following these steps, cash flow issues can be averted.

Issue #2: A bad reputation

Unfortunately, it is very easy to pick up a bad reputation in business these days. Should mistakes be made, word of mouth can quickly spread, both verbally, and online within social media and business review sites. For those in the construction industry, a bad reputation can be earned by not putting safety first. If an accident or fatality happens on site, people will quickly hear about it in the media. And a bad reputation can also be gained by poor workmanship. If a client isn't happy, perhaps because the construction company hasn't completed a project on time, or because the final product is unsatisfactory, then those complaints could bring about the death knell for the company once word gets out.

To overcome this issue, attempts need to be made to secure a good reputation. This includes following health and safety rules, alongside the purchase of the right equipment, to minimise the risks of accidents taking place. Business owners should limit the amount of projects they take on before signing contracts, so as not to overstretch themselves and miss deadlines. And they should also ensure their workforce is fully trained so as to avoid mistakes being made within the construction process.


These aren't the only reasons why construction companies fail. You can learn more here as to other possible causes. However, the risk of failure can be alleviated by taking the appropriate steps. Our suggestions should be helpful, as should those in the linked article above.

Don't play Jenga with your business then. Ensure you have all the right pieces in play to prevent your business from falling down around you.

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