What external factors do you need to consider in a building project?
Posted on behalf of Stuart Siegel, Cornerstone Solutions
As a future leader in the building industry, you are keeping one eye on the business and the other on what’s happening in the world around you. Being up to date with what’s happening on the political scene can make a significant difference to your bottom line. Here’s a few examples.
Trade Agreements – Tariffs on Materials
Whether your importing lumber from Canada or marble from Italy, you need to be aware of the tariffs that are imposed on your materials. While sourcing local receives ticks of approval from the sustainability experts, often times imports are necessary to keep costs within budget or for the sheer volume required. Regardless you need to make sure that you are:
- Getting the best deal
- Aware of how changes to tariff regulation will affect your business
- Have an alternative option if supply is no longer available
- Passing relevant costs onto your customers
During boom times, skilled tradespeople become a scarce resource and which drives up the cost of doing business.–But this isn’t the only increase to the cost of the home. An inability to source suitable trades means delays in schedules, which may negatively impact the bottom line. Make sure you are aware of potential skill set shortages due to changes to employment legislation as well as immigration laws.
Never underestimate the effect tax cuts or increases have on your business. Always make sure that come budget time, you have a good understanding of those items and costs that may impact your bottom line.
Most developers, regardless of how much they love what they do, go into business to make money. However, all too often they’re too busy building and not busy enough reviewing-, costs to make sure business is profitable.
Your business systems should have the ability to tell your profit story, beginning with your original proforma and ending with the hard close 6 months later to determine your true profit.
Do you regularly review your financial and statistical data, or do you operate on a hunch and a prayer?
We’d love to hear how often you look deep into your business to get a true reflection of your financials and processes.