Data from August 2014 showed that the construction sector in the UK powered ahead once again, mainly on the back of a surge of strength from the UK’s home builders. Data from Markit shows that the sector is growing at the second-fastest rate in the period following the 2007 crisis – much faster than experts had previously predicted. The data shows that the purchasing managers’ index (PMI) rose to 64, indicating that the construction industry is expanding. Any figure above 50 demonstrates expansion, while a level of 64 is a very strong indication. Employment in the construction sector also remains at a healthy level.
Can Growth Bring Business Problems?
As any sector grows rapidly, there may be problems experienced with supply. The availability of materials and of subcontractors dips. Capacity pressure is stretched. Any company in the construction sector looking to expand faces pressure to meet the day-to-day running costs of the company while waiting for payments and also servicing higher demands. Subcontractors need assistance in purchasing new equipment and hiring new staff.
Growth demands capital. Without a healthy cashflow, growth can be a problem not an opportunity. Construction businesses in the UK and construction subcontractors cite cashflow concerns as a high priority when looking at the success of their business in the near future. While problems connected to growth can be seen as a positive trend – after all, it shows that the industry is picking up, which is good news for everyone in the sector – but without proper management, growth can be a business-killer. Growth in the construction industry, where financing for equipment for new contracts can be expensive, and labour costs are likely to fluctuate, should be particularly monitored.
How to Finance Growth in the Construction Market
Construction SMEs have excellent opportunities in the near future and successful growth can be sustained through careful use of finance packages. Information given by www.ultimatefinance.co.uk shows us that construction finance can help bridge the gap between getting paid and beginning or completing contracts. Construction finance can assist subcontractors experiencing a boom in orders in the plumbing, decorating, roofing, flooring, plastering, and electrical sectors to name a few. With construction finance the company receives a cash advance that makes it easier to pay staff during a high-value contract and it means you can also take on further contracts to take advantage of the housing and construction boom, without overstretching your resources. Better capital helps you negotiate better deals with suppliers.
When looking into construction finance, make sure you search for a provider who understands the industry and will be able to tailor a financial package to meet your needs. There is no one-size-fits-all solution for the construction business – your subcontracting business or construction firm needs a product that works and one which is affordable on a day-to-day and long-term basis. With a construction boom comes opportunity for healthy growth – make sure you are in the best place to take advantage.
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