4 Steps Contractors Should Take to Prepare for 2020

Contractors 2020 GJMConstruction companies must continually monitor the industry outlook to prepare for the year ahead. Since the construction industry is so closely married to the economy, including consumer spending habits, a close inspection of the current climate is required when planning for the next year.

Below, we break down the steps that every contractor should take when planning projects for the coming year.

Understand Your Niche Market

Overall, conditions for industrial construction in 2020 look good. Consumer spending was up 2.5% in 2019. Compared to the previous year, the economy grew 1.8% in 2019 and is expected to grow an additional 1.5% in 2020. Employment is strong; wage gains have been modest across the board. This kind of boost in the economy is good for industries across the board.

It is still important to understand the exact conditions within your niche market, however. When there’s more growth in commercial businesses, industrial businesses organically expand, creating more opportunities for commercial contractors. Understanding the exact factors that affect your niche market can help your 2020 plans.

Plan for New Technology

Those who can leverage new technology will stay ahead of the game, and the same goes for the construction industry. Automation, for example, can eliminate or at least reduce redundancies in your work operations.

Plan for Your Workforce

The industry outlook for construction is generally positive, but the voluntary quit rate is the highest it has been in over a decade. Unemployment is low, which means there are more available jobs than there are people to fill them. As such, it is important for employers to assure workplace satisfaction and promote engagement within their workforce. Offering attractive benefits, such as a competitive retirement package, can help promote employee retention.

“Prequalification of subcontractors is also a crucial step that can help ensure contractors have the workforce necessary to complete all aspects of any project they are taking on,” says Bob Bobek, CPA, who leads GJM’s Construction Specialist Team and works closely with many contractors.

Finally, leveraging technology to find quality employees will be an essential aspect of recruitment in 2020 and beyond.  

Consider, too, holding your profit margins steady with controlled growth. With all the available work and a limited workforce, you want to grow at a pace you can staff. Rapid growth resulting in large receivables and retainage at lower profits can starve a company of its cash.

Stay On Top of Industry News

Contractors will be continually subject to evolving federal regulations, both with regard to employment, construction of projects, and purchase of raw materials. It is essential to stay abreast of industry news and legislation that may affect practice. A commitment to technology, employee retention, and understanding external factors that affect business will help drive your company forward in the New Year.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

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