Survival rate in construction industry lower than average
We know the construction sector can be a tough space to work – in both the physical and economic sense. There’s a lot of risk to any construction business. So do you love it so much you’ll work for free? That’s the predicament many a contractor and builder face when their client can’t pay the bills.
Recent figures from the Australian Bureau of Statistics (ABS) show that businesses in the construction industry only have a survival rate of 58.5 %.
The Australian Securities Investment Commission shows that nearly 1,000 (992) building sector incorporated entites entered administration during the first half of the current financial year.
“…the fact that 21,000 companies (net) have gone under highlights the basic findings against the most recent report that poor business management was at the source of a lot of insolvencies in the construction industry. It reinforces the need for proper financial control and for companies managing their capital properly.” said Contractors Debt Recovery managing director Anthony Igra
He noted that a prime reason for insolvencies in mid-sized and large construction companies is the fact that they often take on too many projects with too little working capital.
“That’s why you get these companies falling over. You wonder how the hell they owe $40 million bucks. The reason is, they are doing 27 projects all at the same time without enough capital,”
With so many businesses failing due to undercapitalisation, can you afford to be one owed money when your clients business fails? How many thousands, or even millions, of dollars could it cost you? Take action to get secured before you end up in this situation. Did you know you now have an alternative?
Are you serious about your business? Are you serious about protecting it? Then get in contact with CheckVault – 1800 28 28 58. CheckVault is dedicated to helping those who want to help themselves get secured.
Extract taken from “Building Downturn Wiped Out 21,771 Construction Businesses” See the full article at Sourceable