Exploring the latest trends in the construction sector

Chris Smith is head of specialist equipment at Aldermore

As a lender, we stay close to the trends impacting the sectors we support, giving us a better understanding of our customers and the challenges affecting their businesses.

The results of our latest SME Growth Index* uncovered the top priorities for the construction industry and the plans that senior decision-makers are making for growth and how they’re tackling the subject of sustainability head-on.

Reducing costs is the top priority for many

Rising material and energy costs plus inflation were quoted as the top barriers that construction firms have faced in doing business over the past 12 months. This shows a shift in priorities towards the short term, concentrating on staying afloat by reviewing and reducing costs.

However, 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.

Taking sustainability seriously

Senior decision-makers in the construction sector told us their opinions, personal and professional, on the topic of sustainability. Encouragingly, their response was overwhelmingly positive, with businesses spending more time and money investigating and implementing practices to make their businesses more sustainable.

Our latest research shows that the time spent making businesses more sustainable was just over 16 hours and on average £55,000 spent. This has risen significantly from when we asked the same question last year where businesses on average were spending only nine hours and just over £6,000.

While these numbers show good intentions, it’s what’s spent putting ideas into action that matters, and the upward trend continues where, on average, investment has increased to £47,000, up from around £7,000 less than a year ago. Incredibly positive news which shows how the sector is taking this important change seriously.

Areas for investment

The top areas construction companies are looking to invest in closely matches the business priorities, including new equipment, digital marketing and increasing employee salary and benefits.

While increasing the employee salary and benefits may 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 as well as training employees is vital to help construction firms meet their objectives.

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 and easing cashflow.

We’ve made it our mission to provide flexible finance solutions to organisations operating or involved in this crucial sector.

Find out more about how we could help your business or contact our team