Like other industries, the construction industry faces many challenges that can hinder a company’s success. Cash flow, for one, still tops the list of challenges that contractors face. Although there is a lot of different business loan for contractors, the challenges they face don’t stop there.
Despite having survived the last recession a few years ago, the construction industry is still plagued with different challenges.
In spite of that, they continue to grow. Contractors have to make the most out of every opportunity, even when it requires the overcoming of obstacles that come along. Construction companies, big or small, face the same set of problems in their day to day operations.
The following are some of the biggest hurdles they have to overcome in order to remain successful:
Time Crunches
Construction companies have to accept projects that bring in revenue for their company. But as the projects become more complicated, time constraints also become one of the biggest challenge’s contractors have to face. When a labor shortage is added to the mix, it becomes difficult for construction companies to keep up with the projects they have lined up. This often results in delays which can be bad for business.
Because of this, a lot of contractors have taken the necessary steps to combat the issue. As a growing company, they have to make the most out of the projects they take on in order to keep their cash flow stable. Fortunately, technology has been friendly to them.
Project management tools allow contractors to lessen the time they spend on routine business processes. This, in turn, gives them a chance to spend more time in the field completing projects.
Staff Shortage
As more projects come in, construction companies may also need to increase their workforce so they are able to stay on schedule. However, even if you can afford to add more people to your payroll, no one seems to be applying for your job openings. Because of this, a lot of companies have adjusted their employment terms in an attempt to attract more suitable applicants.
The construction industry has started to look less appealing to the youth who are pursuing vocational courses or higher education. With fewer people going into construction, companies are facing a huge disparity in available workers.
When it comes to this challenge, most construction companies usually employ the help of staffing agencies. These companies will be responsible for pre-screening potential applicants. By doing this, they save valuable time searching for qualified workers.
Expensive Insurance
Construction companies face a lot of liabilities in their business. For one, they have to pay worker’s insurance, construction liabilities due to delays and errors, along with accident insurance.
The increasing costs for these types of insurance create a huge gap in cash flow with construction companies having to pay for these on a quarterly or yearly basis.
Companies, however, can save money from the insurance policies they pay. Many insurers offer lower rates for specific scenarios. For instance, if they get combined coverage, the company might be inclined to offer it at a favorable rate. Checking insurance policies and terms and avoiding coverage lapse can also lessen the amount companies have to pay for insurance.
Finding a Good Subcontractor
With lesser people going into construction today, it’s also becoming more difficult to find a subcontractor that contractors can trust. They have to make sure that the principles of those they hire will align theirs and the company. Managing various sub contractors and ensuring they are available when required during the project can be tricky, which is why using good project management software will help ensure the success of the construction project.
If you’re currently in need of a subcontractor for your projects, you can try asking construction vendors and suppliers. You may be surprised by how many reliable people they know in the field. You can also ask the subcontractors you’re currently working with for recommendations. These people can put you in touch with some of the best in the construction industry.
Constantly Increasing Land and Raw Materials
Another big challenge that all construction companies face is the cost of raw materials. Real estate prices are constantly on the rise. This in turn can affect the pricing they are able to offer to clients and can test the limit of a construction company’s capabilities. Also, an increasing rate of inflation can also affect the operations of smaller construction companies.
Although all companies are affected by the constantly changing process, smaller companies tend to absorb the biggest hit in this situation.
Contractors who operate on a project to project basis may be affected most by the constant rise in the price of raw materials. Natural disasters can also increase the demand for construction materials which raises the price of raw materials. Because of this, many companies apply for additional financing so they can keep their cash flow stable and prevent negative cash flow issues.
Overcome any Challenges by Applying for Business Loans for Contractors
With the constant change in the economy, the construction industry will also face ongoing changes. However, construction company owners can be assured that with loans for contractors at their disposal, they can overcome obstacles that can stand in the way of their success.
With the right financing option and proper planning, they can make the most of what they currently have as well as propel themselves ahead of their competitors.