Latest trends impacting the construction sector
Chris Smith Head of Specialist Equipment ,
Aldermore
We stay close to the trends impacting the sectors we lend to , helping us get a better understanding of the customers we support and the challenges affecting their businesses .
The results of our latest SME Growth Index * uncovered how the construction industry are tackling the subject of sustainability head on , their top priorities and plans to invest in growth .
Taking sustainability seriously
We asked senior decision-makers in the construction sector their opinions , personal and professional , on the topic of sustainability , including the approach to climate change . Encouragingly , their response was overwhelmingly positive , with businesses spending more time and money investigating and implementing practices to make their businesses more sustainable .
When we asked the same questions earlier this year , businesses on average had spent nearly nine hours and just over £ 6k looking into making their business more sustainable in the previous 12 months .
Our latest research from November shows that the time spent has nearly doubled to just over 16 hours and £ 55k on average spent . While that shows good intentions , it ’ s what ’ s spent putting ideas into action that matters , and the upward trend continues .
On average investment has increased to £ 47k , up from around £ 7k less than a year ago . Incredibly positive news which shows how the sector is taking this important change seriously .
Reducing costs is the top priority for many
Rising material and energy costs , plus inflation were quoted as the top barriers construction firms have faced to doing business over the last 12 months . This shows a shift in priorities towards the short term , concentrating on just staying afloat by reviewing and reducing costs .
However , this isn ’ t the only priority decision-makers in the industry have been focusing on . Sustainability and expanding their customer base also make up the top three imperatives for the sector . Raising the head above the parapet , and putting an onus on these medium and long term objectives is vital to securing the future of businesses , to diversify and keep up with the times .
Areas for investment
The top areas construction companies are looking towards , closely matches the business priorities . This includes investing in new equipment , digital marketing and increasing employee salary and benefits .
While increasing the employee salary and benefits maybe contradict the need to reduce costs , it clearly shows a realisation that retaining staff is key to the industry , with skills shortages widely publicised . Keeping and motivating well training employees is vital to help construction firms meet their objectives .
Digital marketing expands their customer base outside of traditional marketing and advertising , opening up new channels with a highly targeted method of cultivating and securing business leads .
And investing in new equipment is a mainstay for an industry so reliant on expanding to take on new contracts , replacing obsolete machinery or transitioning to more environmentally friendly equipment .
When delving into how firms in the sector planned to fund their investment , our research uncovered that savings and investments were their preferred methods . While dipping into these pots of money can be useful , asset finance spreads the cost of investment over an agreed period , often aligned to contract periods , thereby matching income streams , easing cashflow .
We ’ ve made it our mission to provide flexible finance solutions to organisations operating or involved in this crucial sector .
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* Research conducted by Opinium on behalf of Aldermore between 24 October – 8 November 2023 , covering 70 senior decisionmakers in the
Construction & Building Materials sector .