At Crouch & Lyndon Lawyers, we’ve helped many builders put contracts together, manage projects, resolve disputes or get paid for projects. By supporting our builder-clients, we’ve noticed some common themes over the years which contribute to their success as builders.
So, what do successful builders have in common?
Below are 3 things we think successful builders get right.
They have a team of professionals supporting their business
Successful builders have a team of professionals (accountants, lawyers, financial advisors and business planners) supporting their business.
If you’re a Queensland builder, the Queensland Building and Construction Commission (QBCC) has financial reporting requirements that must be met. The QBCC’s financial reporting requirements are complicated. Successful builders use skilled financial teams to help them understand, and comply with, the QBCC’s financial requirements.
The professionals working for your business – your team – should care about your business.
We’ve worked for builders whose accountants have failed to send them court documents, or to tell them that creditors have served statutory demands. Our builder-clients have then had to spend thousands of dollars and invest time, in trying to set aside default court decisions or statutory demands. All because their accountants failed to pass-on documents and critical information.
So how do you know if you’ve got the right team of professionals around you?
We could write a whole article just on this question. But for now, we recommend asking these basic questions of your professional team to work out whether they’re right for your business:
- How many other builders do they work for?
- What will you be charged, and when?
- What are their policies for responding to client inquiries? Do they promise to respond to phone calls and emails within a set time period?
- Are they members of any professional associations? Accountants can be members of the Institute of Chartered Accountants in Australia, Certified Practicing Accountants of Australia or the Institute of Public Accountants. Professional bodies impose standards for their members and deal with complaints.
They plan for tough financial times
Fact. If you operate a business in the Australian building and construction industry then there is a high risk that your business will go broke, or become the victim of another building and construction business going broke.
Many experts say one of the causes of building businesses going broke, is the cyclical nature of the building and construction industry. Australia’s building and construction industry is highly competitive. An economic or market downturn can cause building businesses to become financially distressed.
Successful builders plan for market or economic downturns and other events which could impact the business’s profitability and cash flow.
They stick to what they know, and do it really well
We represented a project home builder in a court case once.
Project home builders use set plans and designs to build their homes. They often sell homes through display villages and offer “packages” with options and upgrades. They don’t normally change their house designs because they’ve worked out their build costs and profit margins based on their plans and designs.
Our client, the project home builder, built amazing project homes around Brisbane and Toowoomba. But they ran into trouble when they agreed to build a custom-built, luxury home for a property owner on the Gold Coast.
The project home builder was not equipped to build a luxury home in a coastal region. And they did not adjust their strategies for managing the expectations and demands of their customer, the wealthy Gold Coast property owner.
In this case, the project home builder and the wealthy Gold Coast property owner ended up in Court. And the project home builder went very close to going broke. Too close.
The wealthy Gold Coast property owner was more financially-resourced and had better records and documents than our client, the project home builder.
So what’s the lesson?
We’re not saying successful builders don’t expand their business or build in different markets. Successful builders plan for the expansion of their business and make sure they have tools, skills and strategies in place to manage the growth.
Being a great builder does not mean you can run a successful building business. It’s important you have a business plan and the right team of professionals to support your business. The Australian Government publishes resources to connect businesses with experienced business advisers. You can check out these resources by clicking here.
Do you need help with your building and construction business? Crouch & Lyndon Lawyers would love to be part of the professional team supporting your building business. Master Builders Association of Queensland members receive discounted hourly rates for our legal services.
To test our construction law knowledge and experience (and to ask us the basic questions we’ve outlined above), contact us today by clicking here.