The impact of COVID-19 changes every day, and sometimes even more frequently than that. It is hard to keep up with all of the new regulations, what states are under travel bans, and the latest on vaccine and pharmaceutical development. In addition to trying to manage personal challenges, business owners have to manage business decisions and operational challenge by the minute. This is especially true for business owners operating in the construction industry.
Business owners in the construction and contractor fields were thought to be less impacted than other industries during the beginning of the pandemic, as they were deemed essential. However, as the pandemic took form supply chains were disrupted, and some projects were put on hold or terminated. While many businesses have been able to weather the storm thus far, the long-term impact is full of continued uncertainty.
Predictions on the Future Outlook for the Industry
- Government projects may take a significant halt due to rising deficits worldwide. Availability of future projects to bid will depend on the extent of budget cuts, which will hopefully be offset by potential stimulus to encourage infrastructure spending.
- Other projects will depend on economic bounce back. Currently with the unemployment numbers and low GDP growth, future availability of construction projects will likely decline.
- Possible shortage of sub-contractors due to closures from the pandemic.
- Contractors that have lower cash reserves may quickly face a liquidity crisis as jobs become delayed and cash is tied up in jobs that are not moving along.
Like any other industry, businesses operating in the construction and contractor industry will be defined on how they respond to the crisis. How do they stay afloat, how do they begin to grow again, and ultimately how do they find continued success? While much of the estimated impact of COVID-19 on the construction industry is yet to be felt, on the bright side many contractors were experiencing all-time highs for backlog activity prior to the crisis. Contractors should utilize the runway afforded by their larger backlogs to prepare for what is coming. Utilize this time to right size your company, determine how you can utilize technology to gain operational leverage, and think about how to maintain the safety of your existing workforce. Understanding your game plan and being as proactive as possible is key to thriving post COVID-19.
For additional business advisory and accounting insight for your construction or contractor business, please reach out to me at firstname.lastname@example.org, or visit DeJoy, Knauf & Blood’s COVID-19 Resource Center.