Navigating uncertain times

We’ve survived COVID, but what now?

To say that the last few years have been trying, is really an understatement. In 2020, our lives were rocked by lock-downs, border closures and economic uncertainty. A notable side effect of people being unable to travel and spending more time at home, was the steep increase in the number of home renovations and kitchens in particular. 

Now, after this unforeseen boom, the home renovation and building industry is facing challenges. In order to navigate these challenges, one can’t just carry on with, “business as usual”. To not only survive, but thrive, one needs to be proactive to ensure that you stand out from the rest.

In this article, we are going to discuss some of the current challenges facing the home renovation and building industry. We are then going to move onto tactics that you can employ to meet 2023 head on and effectively navigate your business through the current economic conditions.

Challenges we are facing

At the moment, rising interest rates and inflation are seen as the biggest challenges we are currently facing. This has resulted in higher mortgage repayment rates and a higher cost of living.  Another factor making people cautious to spend money is the predicted increase in the price of electricity and natural gas, which will be felt next winter. This money needs to come from somewhere. The first place it will come from is disposable income, and pausing any unnecessary expenditure.

Another industry-wide challenge being felt is the disruption of supplies. The volatile price of fuel has affected the price of logistics, and we are still feeling the supply chain hangover from Covid. This, along with the effect of the Russian war, has led to an increase in the price of materials. 

Staff and skills shortages are yet another headache being felt by the sector. 

It seems that we have weathered the Covid storm, but now we are dealing with its after effects combined with a few new challenges. There is only one way to face this challenge, and that is head on.  

 

Looking forward, moving forward

1 – Planning and management

Yes, we’ve all heard it a million times, poor planning leads to poor performance. But, we know it’s true. You don’t need to institute huge changes to see improvements though. Even small changes, incrementally over time, will produce positive results. Here are some suggestions:

• Schedule time on each Friday to plan the coming week ahead. Confirm meetings, time allocations and job requirements with employees, suppliers and customers. 
• Schedule time to review job profitability. This is an important indicator of what your actual cost is compared to your estimate. If you find a trend, adjust your estimates accordingly.
• This one may be difficult to do, but you need to say “no” to bad customers. These are the ones who keep you busy due to their unprofessionalism. This reduces your profits and the amount of time you have to spend on other customers. 
• Keep a close eye on invoicing and debt collection. Make use of automated invoice reminders in your accounting system as this will ensure customers get timely reminders of payments that are due. Be aware of how long it takes your customers to pay you compared to your terms. This will have a big impact on your cash flow. 
• Check how long it takes you to pay suppliers and if there are any preferential payment terms that they offer.
• Look after yourself. Burning yourself out to produce short-term results will only lead to sub-standard performance along the road. Make sure you give yourself time to rest, relax and enjoy the important things in life.

 

2 –  Staffing costs review

Staff costs are often the biggest expense for businesses. In their blog, The Small Business Development Corporation of Western Australia suggests two steps… 

• Review your pay structure and confirm that you are paying the correct award and superannuation for your employees. You should also review automated payroll systems that calculate annual leave and personal leave entitlements.
• Review your team’s productivity. Check if your staff are productive for their hours of attendance and if extra training is required to remove any productivity blocks.

 

3 – Marketing

Don’t stop marketing! The temptation will be to stop allocating resources to marketing efforts, but that will just set you back in the long run. Review all your marketing activities and calculate your return on investment on each. A great way to look at your marketing spend is to divide your marketing efforts into two camps; long-term branding versus short-term sales activation. Generally 60% of your marketing budget should be dedicated to the former with the remaining 40% assigned to short-term sales activation. If you need to cut marketing costs, use this as a guideline.

Having an attractive, functional and professional website is a must. If you haven’t already, set up business pages on Facebook and Instagram to showcase your completed projects. 

Gather all your information on your customers to create a target market profile. If you are unsure on how to do this, read this article. Keep this in mind when planning and executing marketing activities.

 

4 – Make strategic investments

Set yourself apart from the competition. Offer your clients a service that clinches the deal. While you may feel the urge to hold onto funds previously allocated for development and growth, doing so at this time would be counter-productive. Now is the time to leave the pack behind.

Imagine that you are in your customer’s shoes. As competition gets a bit tighter, are you going to use the company that brings that extra bit to the table? Or are you going to use the company that offers the same service as everyone else? 

Win more jobs with KD Max

Most people are predominantly visual in nature and the saying that, “a picture tells 1000 words” is especially true. You need to grab your customers’ attention with beautiful imagery of interior designs that evoke emotion and excitement. Create renders, not just of rooms, but of beautiful living areas that people can imagine and immerse themselves in. 

KD Max allows you to create photo-realistic renders of your designs and gives your customers a tantalising view of what their home renovation or development project will look like, prior to works commencing.

The images were created using KD Max and the ones below are photos of the finished kitchen.

KD Max has some incredible features which take designs to the next level. These include:

• Sophisticated reflections 

• Insert your own view. Insert an image of the actual view that the windows and doors of the completed job will have.

• Select your own tile or wall paper designs

• Large library of appliances and access to the cloud library which has 3D models that can be imported into KD Max

• Quoting and cutting list functionality

Looking forward to 2023

It’s not all doom and gloom. According to Forbes, inflation is set to soon reach peak levels and then start tapering down. “In Australia, the federal government and Reserve Bank have forecast that inflation will peak at 7.75% in the December quarter of 2022. Inflation is expected to start falling from next year and continue through 2024.”

Another windfall is that, according to Nicolas Ward (HIA Senior Economist), Australian households saved, on average, 14% of their income during the pandemic. This is up from the pre pandemic rate of 5%. This additional financial cushioning will help Australians be financially resilient.   

The most important thing now is not to succumb to helplessness. Many business owners may feel fatigued after the past three years. It’s understandable. According to Matthew Jones of Cube Performance, “The question being asked is, “where to from here?” The answer is – focus on what you can control, starting with your habits” Take some time to review your business. Instil healthy and growth-orientated habits and plan your way forward. Without proper planning to keep you focused, you can become distracted from your goals by outside noise.

Now is the time to zone in on your business, streamline your processes, focus on high-margin customers and secure the high-value jobs.

Bring your business front and centre with KD Max’s stunning 3D renders and suite of additional features.