I’ve been running my consultancy business for nearly two years now. Doesn’t time fly: my time at TRAD Group seems a distant memory. In my work, I’ve used my decades of experience to help other scaffolding industry businesses – of all sizes – succeed. In many cases, the first thing I do, or suggest if I’m approached, is an audit of a company’s current position, and I’ve discovered that there are some issues that seem to be common across the industry. So I’m sharing them here, with my thoughts on how they can be positively addressed to manage future growth and success.
Are any of these familiar?
Of course, I don’t find all these issues in the companies I work with, so while you might recognise one or two from this list, you’ll probably feel that others don’t apply to you. That’s great, but I’d argue that even just one of the things on this list represents a threat to your business, and you should make it a priority to sort it out. And of course, some of them are interlinked – if you have a problem in one area, it often causes issues elsewhere. My advice is not to ignore these problems, but to be upfront about sorting things out so you know your business is as stable as you can make it.
- No budget in place
A budget – even a basic one – is absolutely essential. If you don’t know what monies are coming in, and what expenditure you are able to make across your business, you simply cannot run your business properly. Many businesses have no cash flow planning or projections – which means there is no basis for measuring progress or understanding the financial health of the business. I have seen businesses where there’s a lack of even the most basic budgeting and planning. The statement: “We had a good year last year” or “we had a bad year last year” is a common one, but I rarely hear the reasons why that is. A general ‘feeling’ is no substitute for proper financial planning that supports capital expenditure and cash flow.
- No action plan for growth
The businesses I speak to all want to grow. And that’s a great thing – every business should be looking for opportunities to expand. But expansion requires a plan, and I rarely see a plan in place. And by ‘plan’ I mean a detailed strategy – not just a goal or a wishlist. The strategy needs to be clear about the target market, the financial opportunity and any financial commitments needed. You also need to consider the competition and any qualifications or expertise that’s needed for example, in niche sectors such as Rail and Events. And then it needs to detail how you are going to reach out to that market and how you can prove your value. The more strategic planning you do, the better chance you give your business to succeed.
- No tracking of pipelines and prospects
Your pipeline is valuable, and prospects offer the opportunity of new work coming on board. If you don’t track what’s in your pipeline, or what business you have quoted for, you’re completely unable to understand where your future income is coming from, or when you might need to commit both labour and equipment to projects down the line. This affects your cash flow, capital expenditure and profit.
- Lack of knowledge and awareness of Work in Hand
Work in Hand (WIH) refers to contracts that are in progress, and orders that are received but are yet to start. Businesses should have clear visibility over what they have committed to over the financial year. This helps them to plan and budget accurately, and also to see where there are opportuntities to bring new work on board to reach turnover targets. If you do not know your WIH, you are effectively working in the dark.
- Estimating
There needs to be a proper estimating system in place for accurately assessing labour returns and materials recovery/rate of return and utilisation. A lack of visibility in this area makes it very difficult for you to manage your resources efficiently. I so often come across no real understanding of how hire periods affect both utilisation and unexpected Capex occurring.
- Lack of effective labour controls
With all projects, it should be easy to see what labour is needed, and budget accordingly. But large jobs, even with a Master Programme often have no specific timings and will have large variation accounts where the contractor demands labour at short notice but the scaffolding contractor has no way of assessing the value of the work. Usually, this means that the contractor’s labour budget ends up many percentage points higher than budgeted for. A lack of control over labour requirements reduces your profit margin, so contractors need to insist that clients gives a weekly programme of work, allowing for proper planning and a daily or weekly assessment of cost vs. income. Contact me if you need support here – it’s not something I can cover in-depth in this article.
- No plan in place to trade profitably through downturns
During Covid, businesses in all industries were affected by a lack of planning for losing business or experiencing a downturn. Those businesses relying on one customer for a significant proportion of their income had a particularly tough time. Of course, the pandemic was a huge shock all round – but these things happen and a well-run business should have agility and flexibility built into its planning so that the business is healthy enough to weather any storm. I can provide advice on sectors and client percentages to help with this.
Investing in Health & Safety can actually make you money
In addition to these 7 common issues, I wanted to make a point about the approach to Health & Safety. No company has ever mentioned their H&S approach as part of their business planning, and yet I know from experience that having a class-leading, robust H&S programme that the whole workforce understands and buys into, makes your projects more profitable than if you just meet the basic statutory obligations.
How do I know this? Like many of my experiences, it’s because I learned an important lesson by something going wrong.
During a large flagship project, a contractor told me that our work was found to be below their expectations in terms of health and safety. We didn’t meet their standards and that came at a cost to the project.
The whole business went through a steep learning curve, designing a bespoke H&S programme that we integrated from the very beginning of our projects, including going through a full behavioural management programme, and began using this approach across all our projects.
We found two important results: first, all the projects were significantly more profitable than those where we had just done the minimum. Second, and more importantly for me, the buy-in from the labour teams, supervisors and management meant that overall engagement and wellbeing improved. That was particularly true of workers on site, who felt valued and could see that we were committed to their safety and wider welfare. For me, this was a better result than the additional profit..
Clearly, this approach was easier to put in place on large projects with a permanent workforce, and is much more difficult with one-off projects where you don’t have a permanent presence on site. But with the right training, supervision and management, it was still possible.
Failing to understand the importance of a strong, structured approach to H&S and wellbeing means you could be missing out on commercial opportunities – and you simply can’t afford to do that.
Taking the wider view
Many of these issues are straightforward to solve. I know that, when you run a scaffolding business, there are many day-to-day operational calls on your time. But actually, as an MD or business owner, your job is to take care of the strategic planning as well as the everyday business.
If you’re interested in a business audit, get in touch. I’ll come into your business, chat to all the relevant people and pull together a picture of what’s happening. I’ll put together a report with my findings, including how I can help you move forward. In some cases, busineses don’t need that help – they can put processes in place themselves. Other businesses ask me to work on a specific project, or to provide more long-term support or individual mentoring. It’s entirely up to the business to decide what to do with my recommendations. Just email [email protected] to find out more.
