The 5 Stages Of Decline For A Building Company

With 75% of residential building companies operating on net profit margins of less than 3% while dealing with rising construction costs of 25%, it’s no surprise that so many of them are facing financial difficulties…
Especially those building companies in Australia that have signed fixed price contracts without cost escalation clauses!
The last 12 months have been tough on builders with around 80% of them using their own funds in order to complete a client's home.
Fortunately, new construction is cash flow positive which has allowed many building companies to take a temporary hit on their profits across one or more jobs and still pay their suppliers and subcontractors on time.
However, if losses continue unchecked they will eventually be unable to pay their bills and will be forced to call the liquidators in.
This is a truly traumatic time for the owners of a building company. And a situation that could have been easily avoided had they sought help and changed direction.
And it’s something that can affect any building company of any size and any age.
Even the best, most well run businesses can be caught out by changing environments and a financial situation that they did not see coming.