Small Construction Companies Keep Australia on the Move

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The building industry is a vital cog in the machine that fuels the Australian economy. The construction sector employs 9% of the total national work force and pumps nearly $200 billion back into the economy (Australian Bureau of Statistics).

And it’s not just about creating living wage jobs, either. A modern and efficient infrastructure empowers innovation and productivity across the board, and without construction, there’s no infrastructure.

Construction is at the heart of the fabric that weaves Australia’s socio-economic well-being. As the building industry moves forward, so too does our nation.

This stuff’s not really breaking news, though. Everyone knows that “new construction starts” are seen as a key indicator of the health of our economy. But what you probably didn’t know is that 95% of all building related enterprises are classified as “small” businesses with 5 employees or less.

For once the big boys get a smaller slice of the pie.

Huge construction companies like Hansen Yuncken, Lend Lease, Grocon, and Brookfield Multiplex are huge names in the industry. They’ve got their corporate name and logo plastered across fleets of work trucks and dangling from the boom of giant construction cranes.

It seems like the big boys build everything! In fact the top 100 construction companies in Australia account for approximately 25% of all building in 2012/13.

Obviously the biggest contracts on the biggest projects go to these guys, but when less than 1% of all construction companies have more than 20 workers on the books, it’s plain to see that as a whole the building industry creates a huge opportunity for small businesses.

Building is an attractive field for entrepreneurs who want to run their own show because the vast majority of the competition are also small operations. In terms of market forces, there are fewer obstacles to overcome when trying to break into the game. Much of the allocated work is by tender response and without oversimplifying the point much of the work awarded comes down to the mighty dollar.

From reality TV to housing prices.

At the residential level there’s plenty of work for budding building contractors because we are simply crazy about renovating and/or expanding.

Reasons behind the craze are plentiful. We’ve got programmes such as Backyard Blitz glamorising home improvement and with more households earning a double income, there’s simply more money available to be spent on upgrades.

Equally, we have a very small amount of available options with regards to cities (eg. if you work in the big smoke in Victoria you have Melbourne, Geelong and at a stretch, Ballarat). So people who live in favoured inner suburbs have to go up to accommodate the family. Equally rising housing costs in the state capital cities plays a huge part in the demand for more General Contractors.

As the cost of housing shoots through the roof, it simply isn’t feasible for everyone to buy the house of their dreams straight off the bat. While the outer-lying suburbs cater for a certain demographic that have bigger houses with the options of housing a larger family, to a lesser extent couples with smaller families are taking a cue from their grandparents’ book, starting off with a smaller house which can be extended down the track when the wallet or the need arises.

These factors and more spell out good news for small construction companies.

Business may be booming, but are you at risk?

Whereas most new businesses need five years or so to really ramp up, trustworthy contractors who do quality work tend to quickly line up more projects than they can handle.

If you’re a top-notch registered building contractor with a small team of reliable tradies, the sky’s the limit. Unlike a shop or restaurant, it’s generally not a lack of customers that makes running a small construction business such a risky endeavour. It’s liability.

Big companies have entire departments devoted to managing safety, duty of care, and site liability. They’ve got the processes and resources available to cover themselves in the event of an unfortunate accident. Resources that small businesses simply don’t have at their disposal.

Under the law, small businesses are just as liable in the event of an accident as the top 100 construction companies. This is why forward-thinking owners make sure that their family and livelihood is covered should things go pear-shaped.

If your business is not protected, you’re walking the tightrope with grease on your boots.

Buildsafe helps to provide a safety net for small construction companies by providing affordable insurance products that mitigate unforeseen liabilities on the job site. You’d be surprised to find out how little it costs to ensure that your way of life isn’t pulled out from under your feet because of someone else’s mistake.

Sources:

https://www.masterbuilders.com.au/portfolios/economics

https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/1350.0Feature Article1Oct 2010