Negosentro.com | 7 Biggest Challenges Construction Companies Face | The construction industry is a dynamic driver of our country’s economy because it builds the infrastructure that’s critical to the operation of various industries. If you’re running a small construction company, then you’re not a stranger to the many issues that may arise in the middle of a project. It doesn’t matter if you’re a seasoned general contractor, a one-man painting contractor, or a remodel business. You won’t be exempted from the common issues that may compel you to apply for construction business loans for contractors. Take a closer look at these 7 biggest challenges that construction contractors big or small may encounter down the road:
Shortage of Skilled Workers
Despite the uptake of technology, the construction industry remains to be dependent on manual labor. This means that as the industry rises steadily, the demand for skilled workers grows as well. Unfortunately, high school graduates are being pushed toward college instead of vocational trades. With the millennials’ lack of interest in the field of construction and the majority of the industry’s existing workforce close to the retirement age, a shortage of skilled labor is inevitable.
One of the best ways to deal with this problem is to introduce your industry to high school students or recent college graduates who may not have thought about choosing a career in construction. You can also keep your eyes peeled for any of the existing workers who may be willing to be trained and mentored by you. Lastly, using a staffing agency is another way to get qualified skilled workers as quickly as possible.
Another huge headache is dealing with subcontractors that are unreliable for their jobs. To help you steer clear of this problem, try to get the inside scoop from the materials suppliers and vendors that you regularly do business with. They can recommend other subs that they’ve previously worked with. If you have a potential subcontractor in mind, make it a point to check if their licenses have no outstanding violations or if they’re up to date. Furthermore, to ensure your protection, ask if they carry general liability insurance and workman’s compensation insurance.
High Premiums for Types of Insurance
Although a part of running a construction business involves obtaining contractor insurance, this doesn’t mean that you’ll need to spend a fortune on general liability for construction accidents, defects, and delays. If your insurance cost is not well accounted for, this could cripple your company. To get lower rates, consider combining coverage and not allowing your coverage to lapse. It’s also important to review your existing policies regularly to look for any changes that can allow you to save money.
Poor Document Management
When your invoices, receipts, contracts, material orders, change orders, certificates of insurance and employee applications are beginning to fill rows and rows of filing cabinets, think about going paperless. You’ll be surprised at how organized you can be on your projects and payments if you have a digital solution to help you manage your documents. However, you’ll need to be sure that all of your digital files are backed up to a hard drive or a specific cloud service.
Changes in Regulations
Every construction contractor must stay on top of any updates on the city, county, state, and federal regulations. It helps to follow reliable industry publications or blogs to stay up to date with the latest changes that may significantly affect your construction business.
Slow Invoicing and Payments
The problem with construction companies that aren’t using the appropriate invoicing systems is that they find it hard to regulate their cash flow. On the flip side, a suitable invoicing system can allow you to keep track of their progress payment schedule throughout the various stages of the project are monitored.
Since contractors don’t usually get paid until the project is over, many of them don’t have enough cash to cover payments that are due to vendors, subcontractors, equipment renters, materials suppliers, and employees. Nothing’s more stressful than not having enough cash flow to cover your operating expenses. For this reason, you must never underestimate the capital requirements for the most profitable projects. If this happens to you, consider applying for construction business loans for contractors to help see you through certain tight spots.