Simply Business

Australian Construction Businesses are Closing: Find Out Why

Construction manager and engineer working on siteIndustry reports tend to suggest that the construction industry in Australia is going to grow in 2018. One of the sectors experiencing it is remodelling.

The 2017 Roy Morgan Research data revealed that almost 8.4 million households performed some type of renovation within the last 12 months. It was an increase from 7.5 million in 2016. Over 2 million homeowners spent at least $5,000. They either extended their house or performed a major or more complex remodel.

In spite of this, construction is one of the industries that are at a high risk of failure. The question is why.

Why are Construction Businesses Shutting Down?

Data showed that no less than 30 construction firms in Queensland closed their doors in 2017. Around the same time, more than 400 building businesses had a high to severe risk of failure within a year.

A business’s failure, though, can be due to a wide variety of factors. One of these is the unique selling proposition. What value can your business provide to the clients that make you different from all the others? It can be as simple as investing in the right equipment such as tile cutter parts. The efficiency and speed can cut down the waiting time of clients.

Effects of State Policies

Another possible reason is the loss of Chinese investors. Construction is an expensive business. It’s therefore not unusual for Australian firms to seek out partners. These include the Chinese community. Country regulations, though, might be preventing these other foreign companies from eventually investing.

The other is the leniency of financial institutions towards delinquent businesses. For a certain period, the construction industry in Australia was in a downward trend. It’s possible they wouldn’t have the sufficient cash flow to settle the debt.

There’s also the demand for the industry. Construction is one of the foundations of any country’s economy. But state policies can affect that. For example, Queensland now charges 3% as a surcharge for properties bought by foreign buyers. It’s even higher in other territories such as New South Wales and Victoria.

Furthermore, many of the construction projects are about to end this year or in the coming months. It can tighten the competition and may even ease out smaller firms.

It’s inevitable for some businesses to shut down, but all should have the chance to thrive. A construction company can achieve that through smart strategies, friendlier government policies, and financial support.