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Letter to the Editor Are you ready to profit?

Since the late stages of 2007 the UK construction industry and the window and door market in particular had been waiting on tenterhooks for signs of economic recovery, and there are now signs we may finally be rewarded for our patience.

Most recently a market survey from the Royal Institution of Chartered Surveyors (RICS) has demonstrated a slow but steady growth in construction activity during 2013, with a net balance of 21% more surveyors across all regions reporting a rise in workloads during the second quarter. The survey respondents went so far as to say that they expect an even greater rise in activity over the next 12 months, with 59% predicting a continuation of this rise in workloads.

Obviously any signs of economic growth which offer hope of a recovery in our industry are welcome, but we must also remain realistic. Yes, it is undoubtedly good news that things look less bleak than they did at the height of the recession, but it is unlikely that we will ever see the market value reach the kind of heights we enjoyed in years gone by again.

However, we can prepare ourselves to get the best from the recovery. One of the biggest problems we currently face is profit, the struggle for which has unfortunately led, in many cases, to a dangerous ‘how low can you go’ situation. The other problem is that often companies put their focus firmly on sales instead of margin, failing to take into account fixed costs such as premises, wages, machinery, tax amongst the extensive list.

By taking a different approach, we can be better prepared to benefit from market growth as and when it occurs. It may seem like common sense, but it’s important to plan for profit. After all, if you don’t plan to make a profit, how can you expect to make one at all? There are simple steps you can take. Set a minimum profit target each week; taking into account your overheads; and stick to it. Move jobs around if needs be – some lower value jobs actually have a higher margin so try to get out of the purely volume sales focussed mindset.

At Tradelink we have been long been putting measures in place to ensure we plan ahead, and we are passing this onto our customers via our Planning for Profit scheme. If you’d like to talk to somebody to find out more or to arrange a visit, we’d be happy to hear from you.

 

Jim Moody,

Managing Director, Tradelink

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