The construction industry is on the brink of significant growth, spurred by government initiatives designed to revitalise the sector. The Labour government’s continued commitment to ‘Get Britain Building’, alongside the launch of national infrastructure projects, are set to drive expansion across the industry. This, paired with opportunities emerging from the Northern Gateway project and the Levelling Up scheme, present even greater potential for businesses to thrive.
‘Get Britain Building’
The ‘Get Britain Building’ initiative is a government-led scheme which aims to accelerate the construction of homes and infrastructure across the UK. It is part of a broader effort to tackle the country’s housing shortage and stimulate economic growth through increased investment in the construction sector. The initiative includes a range of policies and funding opportunities designed to make the planning process more efficient, reduce barriers to construction, and support the development of new housing projects. In the recent Budget, Rachel Reeve’s reinforced this focus by announcing targeted regional priorities and adjusted funding, emphasising more streamlined project criteria and opportunities. The budget also includes a £5 billion commitment to the government housebuilding programme, which aligns with the initiative’s goals.
The Northern Gateway
The Northern Gateway is a significant infrastructure project that aims to unlock the economic potential of northern England, and offers substantial opportunities for construction businesses, with a focus on developing new housing, commercial spaces, and transportation networks. The Northern Gateway offers a unique opportunity to deliver 15,000 new homes over the next 20 years, and as the project gains momentum, a surge in demand for construction services is predicted, offering businesses a chance to participate in large-scale developments and joint ventures that could redefine the region’s economic landscape.
Levelling Up scheme
The Levelling Up scheme is another key initiative designed to address regional disparities and promote economic growth across the UK. This scheme encourages collaboration through joint ventures between private companies and local authorities, particularly in areas that have historically ‘lagged behind’ in development. For construction businesses, this presents a unique opportunity to engage in projects that not only contribute to regional growth but also position your company as a key player in the government’s plans to rebalance the economy.
Preparing for growth
While the potential for growth is exciting, it also presents various challenges. The construction sector continues to face rising costs for materials and labour, alongside the need to meet stricter building regulations such as the Future Home Standard. This, paired with the recent Autumn Budget announcements on changes to Capital Gains Tax, business rates and adjustments to minimum wage, means there are various factors which could impact operational costs.
In order to capitalise on these opportunities, and ensure you are positioned for growth, it’s essential to reassess your strategy…
- Set clear goals: Define short-term and long-term growth objectives. What do you want to achieve in the next year? The next five years?
- Market analysis: Understand market demand, identify potential new markets, and assess your competition.
- SWOT analysis: Identify areas for growth or improvement by conducting a thorough analysis of your strengths, weaknesses, opportunities, and threats.
Securing working capital
Growth demands sufficient working capital. If your business has faced cash flow challenges or has a low credit score, addressing these issues is crucial before seeking new financing. Strengthening your financial position will make your business more attractive to lenders and better equipped to secure the funding needed for expansion.
Key areas to monitor include:
- Supplier prices, lead times, and stock management
- Wage gaps between skilled and unskilled labour
- The impact of payment retention on cash flow
- Costs associated with hiring machinery and equipment
- Expenses related to health and safety, insurance, and training
To secure the best financing options, we recommend preparing detailed financial projections that account for various growth scenarios. Our team of expert cloud accountants can provide invaluable support in this area by helping you develop robust forecasting plans, including real-time cash flow management, scenario planning, and three-year three-way forecasts which integrate your profit and loss, balance sheet, and cash flow projections into a comprehensive financial strategy – providing the insights you need to make informed decisions, anticipate challenges, and capitalise on the array of opportunities currently available to businesses within the construction industry.
Furthermore, tools like Capitalise’s credit review service can be helpful to gain a deeper understanding of your credit score and the factors affecting it. This service can also help improve your score by ensuring more accurate and up-to-date financial information is reviewed. Plus, there’s a guarantee that your business credit score will improve, or you’ll get your money back.
Get in touch
As the construction industry gears up for a new era of growth, ensuring your business is financially prepared will be key to seizing the opportunities ahead. Whether you’re looking to get involved in the Northern Gateway, partner on a Levelling Up project, or simply expand your existing operations, now is the time to act. Speak to our cloud accounting team, who can support you with business growth and assist with funding opportunities, including Capitalise for Business and their credit review service. Get in touch by emailing enquiries@pmm.co.uk.
