Can we, as small builders running family owned businesses, really change the residential construction industry?
At Live Life Build, we believe we can. We’re on a mission to elevate the professionalism of the residential construction industry.
And as small builders – we’ve got a louder voice than you potentially realise.
One of the things we know about our industry is that it’s a big one economically. The construction industry employs around 10% of the Australian workforce, and is a big part of the economic performance of Australia as well.
As builders running smaller businesses, it can feel like this isn’t our industry. That the residential construction industry that the government focuses on, and that our industry associations also focus on, is at the big end of town. Those building companies with hundreds of employees, doing hundreds of homes every year. Many of which are run by people who have never been builders themselves.
Here at Live Life Build, we both also work inside this industry (and have done so for decades now). We know just how many smaller operators there are, and we had a hunch that our spending power and potential influence is bigger than anyone realises or is taking notice of.
We decided to test our hunch – and guess what? We were right. In this blog, we take you through some of the things we’re looking at here at Live Life Build, and that we want to see improved in our residential construction industry.
We hope you’ll follow along. Because we know our voice is strong when we come together.
Read on here …
5. WHO REALLY RUNS OUR INDUSTRY?
The building industry can be an incredibly hard one to work in, and it can be even more challenging to run a successful building business. One of the hardest things for any small building business is keeping up with all the rules, regulations, products and workplace health and safety that are forced on us from what the big guys are doing.
The building industry is made up of so many different sectors, many of them dominated by large multi-billion-dollar companies. Yet small residential building companies are tossed in the same group – to then try to follow what they decide they can afford.
Even when you separate the residential building sector, it’s still very dominated by the large volume home builders that, on face value, look like they are leading the way.
The frustrating part of this is that most of these volume building companies aren’t even run by people that have ever been builders.
A lot of the people in charge have either completed a licencing course to get a builder’s number so they can operate and have no hands-on experience, or they have done a deal with a builder to use their builder’s number as a nominee for the company.
And it’s not just large volume residential builders that have NO hands-on building experience that are setting the course of the industry. Small builders are being led from all angles by decision makers that have never been builders or understand what builders really need or want.
The construction industry makes up 10% of our GDP in Australia, and around 10% of employment as well. So, during challenging economic times, government strategies will focus on ensuring the construction industry keeps going and growing.
However, you have decision makers in government creating schemes they think are helping, but often those schemes make it harder for our industry to ever become more professional.
One example is the amount of money they keep channelling into schemes to try and get more people doing apprenticeships, at the same time as reducing the staffing and standard of training at TAFEs. The onus is put back onto those within the industry to train these apprentices, with many apprentices ending up as low-cost staff on big jobs not receiving sufficient on-the-job training.
Now our industry is flooded with poorly qualified tradesmen that haven’t been taught properly or had enough experience.
Many of the large volume builders have CEOs that sit on the boards and panels of Government housing bodies and Industry Association Groups. As a result, they’re driving many of the new rules, regulations, and schemes that all of us small operators then have to follow. They don’t understand the difference between the large companies and what the smaller family building businesses are dealing with, so it’s very one-sided.
In addition to this, we also have large multinational supply companies that work with the government and the large volume builders to also set the course of the industry.
These companies also report to shareholders, so their goal is focussed on profit, and that is often achieved through having less staff, less risk, and a lot less points of contact.
As individual, family run businesses, reaching us and connecting with us is likened to ‘herding cats’. And so, these large supply companies are often focussed on the business needs of the volume builder because it’s a far simpler exercise to work with them than try to connect with all of us smaller operators.
So who do you think runs our industry?
4. EVERYONE HAS GOT IT WRONG: THIS IS WHAT WE KNOW
Now we don’t know if the government, industry bodies, large supply companies and volume builders have ever asked the questions that we ask here at Live Life Build.
We had a hunch they had it wrong. Our hunch was that, when it comes to residential construction, the volume builders are spending less than the small family run building businesses. However, because it’s like ‘herding cats’ to reach us, the focus stays on the volume builders to keep things simpler overall.
And so, at Live Life Build, we decided to test our theory and team up with one of Australia’s leading market research companies, Insights Exchange.
Our hunch was right. The truth is that together, small family run building businesses are financially worth more than the big guys.
One of the key findings from our market research was this: Of those we researched, 70% identified as residential builders. And of that 70%, more than half (54%) are doing custom new homes and renovations.
Given that the value of the residential construction work completed in Australia in 2019 was $76 billion, this equates to $41 billion as custom projects.
Each year, small builders doing custom new homes and renovations are spending $6 billion more than the volume / project builder sector.
We also found that the average revenue for residential custom builder companies is $2.78 million per annum. However, more than half (54%) of those surveyed who identified as custom builders, have an annual revenue of $1 million. Our average was being pushed up by those who were doing $20M+ in our survey.
Over a third of the companies surveyed are only completing one or two custom residential builds per year. Core projects are new homes and renovations, with some of those surveyed doing smaller projects (decks, bathrooms, landscaping, pools) to bolster their revenue.
So, you can see from the data that we have collected that small family building businesses actually have the power to change the industry by galvanising together. It doesn’t matter if you only do decks and bathrooms, or you build one to five homes a year together. We have the power to change the future of our industry.
3. DON’T LET IT GET YOU DOWN
We talk to so many builders who are fed up with the industry. They think it’s letting them down because everything is focused on the bigger players.
So many builders have come from a tradie background and then really struggle getting the hang of running a building business. On top of this they have to deal with many outside influences that put some much pressure on them to operate a certain way.
We understand the pressure of having to live up to so many expectations in the industry that are often created for much larger companies. So, it’s important that you don’t let these pressures get the better of you and start controlling what you do.
For so many people becoming a builder is a dream job that they have wanted to do forever. They have worked hard to complete an apprenticeship and done courses to get their builder’s licence. Then after a little while of running their own building business they start to wonder what they are doing, as the pressures of having to keep up with the industry take over.
When getting your builders licence there is very little, if any, education on so many parts of running a building business. It’s easy to see why so many builders don’t last long. It can feel like there’s no one around to help you, and all you see and hear is what the bigger, more successful companies are doing.
At Live Life Build, one of our big goals is to give custom residential builders who run smaller businesses a place where they feel comfortable asking questions and speaking to each other.
We understand that there are so many incredible builders out there that are delivering fantastic projects but are struggling with the running of a business. And it’s supported by how industry often treats small builders as well.
You can feel like you should know better which means you never speak up and ask for help.
The struggle is real, and totally understandable. But don’t let the old fashion way that the industry operates get you down. Use it as fuel to push you to break away and improve the industry.
2. WE MAY BE SMALL, BUT WE’RE MORE POWERFUL WE REALISE
The building industry is very old fashioned. Up until now, builders haven’t been very well respected or treated like professionals. A big reason for this is that builders have never really stuck together and helped each other out.
And, at Live Life Build, we see that this is a big reason why it’s been really hard for a lot of builders to learn what they need to do to have a successful business.
In addition to this, builders are licenced and managed by government departments and industry associations that put builders on the same level as all the other trades we must manage and take responsibility for.
It’s time to all work together and become the leaders of the industry. Together there are a lot of us and if the industry wants to keep holding us responsible for everything that happens on our sites, it’s time we stand up and work together to have our own voice.
We know that builders are fed up with:
- Being told by Architects what you can charge even though you are not making money on their projects
- Having to take responsibility for everything that’s drawn on documents even though you are not a qualified designer, engineer, certifier etc
- Being told how to operate your business by people that have never stood on a job site
- Being told you should know everything about running your business even though it wasn’t taught to you when you got your building licence
- Clients not treating you like a professional
- Clients, designers, architects not valuing you
It doesn’t have to be like this. We’re seeing the difference for our Live Life Build ELEVATE members as they learn how to operate more professionally, work collaboratively with their clients and colleagues, and are respected for the value they bring to the process of building and renovating.
This is what happens when we get together and support each other. This is what happens when we seek to improve our business knowledge as builders.
This is what happens when we want to improve the residential construction industry together.
Because together, we can make a difference. Together we can become respected professionals that clients trust and value.
1. IT’S TIME TO RUN OUR OWN RACE
Live Life Build is on a mission to improve the professionalism of the custom residential building industry, and change the way it operates.
We believe that small residential building companies should be identified separately from the large volume builders and big commercial companies. The way the industry currently operates is that all building and construction work gets thrown in the one big basket. Inside the memberships and industry associations, there is no real distinction between custom builders, volume builders, commercial builders, highrise, civil, or infrastructure. We all just get mixed together.
It seems strange that building companies and trades are all licenced under the same government bodies. Then on top of this you have builders that only turnover a few hundred thousand dollars being similarly dealt with by industry associations to builders that turnover billions of dollars.
Yes, there’s different categories and licence classes for builders within this.
However, a builder turning over a few hundred thousand dollars has very different business needs and challenges to a builder turning over a billion dollars. And often there’s more at stake in the challenges of a smaller builder, because it’s their own home and their own family’s livelihood (as opposed to shareholder profit).
It’s time for all small builders to galvanise together and work with each other to elevate our sector of the industry. In the past, we haven’t spoken up and had a loud enough voice for the industry to take notice of us.
Live Life Build wants all small to medium residential custom home builders to stand together. We believe we can become the most influential sector in the residential construction industry.
Together we are bigger, stronger, louder, and more powerful. It’s time for all smaller builders to step up and change the residential construction industry. Our industry.
Let’s stop focussing on what’s wrong and what we can’t do. Let’s instead start running our own race, because together we can become highly respected professionals in the industry.
Let’s do this.
So, here’s our 5, 4, 3, 2, 1 to identify your ideal project.
5. Have you asked your team what their goals are?
4. How can you help and facilitate your team’s goals?
3. What are your goals as a team?
2. Holding people accountable.
1. Celebrate the wins and create a good work environment.
Live Life Build’s 6P Methodology unlocks the 6 ways to elevate your building business:
PERSONAL | PROJECTS | PEOPLE | PARTNERSHIPS | PROCESSES | PROFESSIONAL
Want to learn how to be a better business owner? Learn the systems, marketing tools, mindset and business skills you need in our group program and mastermind, ELEVATE. Learn more here.