What happened with Cubitt’s Granny Flats?
After 30 years in business, Cubitt’s liquidation led to 80 job losses and over 100 incomplete projects, leaving debts totaling $5.7 million—$2.6 million owed to subcontractors. This collapse highlights how even well-established companies can struggle with today’s financial pressures.
Key challenges for construction businesses
- • Rising Material Costs: The prices of essential materials like timber and steel continue to increase, squeezing already narrow profit margins.
- • Cash Flow Issues: Long project timelines and delayed payments can lead to cash flow challenges that affect daily operations.
- • Tighter Lending Conditions: Banks are imposing stricter lending terms, limiting access to funds when businesses need them most.
- • Economic Uncertainty: Broader economic factors, like interest rate changes, can significantly impact the construction industry’s stability.
Strategies to safeguard your construction business
To protect your business from financial difficulties, consider implementing these essential strategies:
1. Build Cash Reserves
Maintain 3–6 months of operating expenses in a high-interest savings account. This reserve can act as a buffer during slow periods or unexpected challenges.
2. Diversify Your Offerings
Expand your services to reach a broader market. For example, if your primary focus is granny flats, consider adding renovation services to increase revenue streams.
3. Implement Robust Systems
Use integrated accounting and project management software to monitor project costs and timelines, ensuring your finances are always up-to-date.
4. Strengthen Credit Control
Set clear payment terms with clients, and offer early or prepayment discounts to encourage timely payments, reducing cash flow risks.
5. Consult Financial Experts
Engage with small business debt advisors, virtual CFOs, or business mentors. These professionals provide guidance on debt management, cash flow planning, and strategic growth.
Take action with AVA Advisory
Now is the time to review your business practices. Are your cash reserves adequate? Do you have a strong credit control system? Are you exploring new revenue opportunities? Small adjustments today can make a big difference in the future.
Seeking professional guidance is critical. Small Business Advisory professionals can provide actionable insights to enhance your business’s financial resilience.
How AVA Advisory supports your business
At AVA Advisory, we specialize in helping construction businesses navigate financial challenges. We offer comprehensive services to build a stronger financial foundation, including:
- • Financial Health Checks: We assess your financial position and identify potential risks.
- • Debt Restructuring: If debt is a concern, we can negotiate with creditors and create a manageable repayment plan.
- • Insolvency Advice: We guide you through insolvency options and help you understand your obligations.
- • Business Turnaround Strategies: Our experts work with you to develop strategies that improve business performance.
- • Corporate Advisory: We provide guidance on cash flow management and strategic planning for long-term success.
Contact AVA Advisory Today
For a confidential, no-obligation consultation, contact AVA Advisory at 1300 181 220 or book a time through our online platform. Let’s work together to ensure your construction business has the resilience to thrive in challenging times.
