This kind of headline can strike fear into the hearts of consumers and the business that rely on them. But what’s the truth behind the headline? Should you be worried about your imminent or ongoing projects? How can you expect your contractors to behave? What will it mean for the future?
I run a small landscaping business with my husband and seven employees. Whilst we deal with all aspects of horticulture and maintenance, the focus of our business is garden design and build for the domestic market. Technically we are digging down rather than building up, but we are part of the construction industry and affected by these issues in the same way.
A garden transformation or extension isn’t like purchasing a product. If things go wrong, you can’t send it back to the shop and get a replacement or refund. The state of your home or garden can have serious effects on your mental and physical health.
If you are having work carried out in your home you will inevitably be using a small business or sole trader. The forces that affect these types of business are often very different from those of big corporations. It’s not a distinction many consumers are aware of.
There is also hype in the news and media. Commentators will tell you this situation has been caused by one thing or another to support their cause. The truth is that, actually, a series of unprecedented events combined on a global scale to create a new and unusual situation for UK business and construction. It’s useful to know how these issues will affect you in practical terms.
· WHY IS THERE A LACK OF SUPPLIES?
UNPRECEDENTED LEVELS OF DEMAND
For many of us in the UK, lockdown changed the way we view our homes and gardens. Improving our immediate environment became a priority. We were spending more time there and needed ‘safe spaces’ as our collective mental health deteriorated. This meant more people were starting building projects than would normally be the case.
Unable to go abroad for our regular holidays, with staycations being limited and even popping to the pub or shops becoming impossible, suddenly there were more funds available in our household budgets for home/garden improvements.
Being furloughed, shielding or self-isolating, we now had the time to do those jobs we had been putting off, and demand for supplies in the DIY sector soared. The Kingfisher Group (who own B&Q and Screwfix in the UK) reported that;
“From late April onwards last year  we started to re-open our stores and our businesses saw consistently strong demand from customers for home improvement products and services.” Kingfisher 2020/21 annual report and accounts
Most of our building supplies come from outside of the UK. Scandinavian timber, plastics from Texas, sandstone from India. COVID has had a global impact on staffing and infection control, all of which have combined to cause delays in manufacture and supply chain.
Wherever you stand on this, it’s a fact that importing to the UK has become much harder to do, logistically speaking.
SMALLER MARGINS FOR ERROR
The market can usually absorb any material-specific problems arising from local issues (for example, a warmer winter affecting timber production in Scandinavia). However, in an industry already being squeezed to its limits, local issues will quickly add to the global problem.
· WHY IS THERE A PRICE RISE?
On a very basic economic level, living in a capitalist economy, if demand for products, materials or services exceeds delivery then prices for these will rise.
The issues outlined above which have caused changes in manufacture, supply and demand have also lead to an increase in the manpower required for any given process. This could be additional people to cover sick days, time spent working out new import/export tariffs and contracts or recruitment of new customer service staff. This increase in overheads will ultimately have a knock-on effect on price, as businesses need additional income to cover increased costs of wages.
· HOW DOES THIS AFFECT SMALL BUSINESSES IN THE BUILDING / CONSTRUCTION / LANDSCAPING TRADE SPECIFICALLY?
Unless they are lucky enough to find a local, reputable company that grows its own turf or trees, trades will usually be reliant on middlemen to supply their materials. This makes good business sense. It guarantees quality, means that sourcing and delivery are taken care of and allows for easier cash flow using credit accounts. It does, however, mean one more link in the chain taking a cut, so prices to tradesmen are pushed up further when costs rise.
Small businesses aren’t likely to have lots of physical space (or any space at all!) to keep a running stock of materials. Many place orders from job to job, which means they are hit hard by delays in supply.
Generally, small businesses have limited cash flow and smaller profit margins due to a smaller customer base and workforce, compared to national or corporate companies. This means they are less able to absorb a rise in prices and will inevitably have to pass this on to their customers.
A simultaneous increase in demand and reduction in supply, at a time when the availability of manpower has been reduced, means that small businesses have had to somehow find extra time and resources to take on additional enquiries and spend more time sourcing essential materials for jobs.
The value of a brick alters drastically when you have spent 4 hours driving around suppliers trying to find something to match into existing brickwork. Not only do costs include petrol and vehicle wear and tear, but it’s also a wage that needs to be paid when there has been no corresponding generation of income.
· A QUICK WORD ABOUT ‘POST-COVD PROFITEERING’
Sadly, there probably are immoral companies out there to whom this phrase applies. However, I can pretty much guarantee it does not apply to a small business or tradesman.
Running a small/micro business isn’t a job, it’s a lifestyle choice. Making sure that your mortgage and direct debits are paid at the end of the month is one thing but making sure seven other people’s mortgage and bills are covered, especially when they have families or dependents, is a whole other ball game.
Small businesses and the self-employed don’t have departments. Usually, it’s one or two people working their socks off. Their website and marketing haven’t been written by professional copywriters. The out of hours customer service you receive is someone taking a call when they are with family or friends. Any discount comes directly out of the owners’ and employees’ pockets.
Running a business is an incredible feat and those who do it tend to be passionate visionaries who genuinely care about their customers because they can’t afford a bad reputation. In fact, one of the main struggles that the self-employed face is under-charging, as they are scared to put their prices up.
Whatever the reasons for prices rising (and I have explained many here) ‘post-COVID profiteering’ won’t be one of them.
· WHAT CAN YOU EXPECT AS A CUSTOMER / CONSUMER?
RE-THINK LOCAL ECONOMY
We are used to the advantages of a global economy. No one thinks twice about ordering products manufactured in China from Amazon. Clothing in high street stores is manufactured in Pakistan or China. The disparity of economies around the world means that, counter-intuitively, it costs more to purchase something manufactured in the UK. Let’s face it, no one wants to pay more if they can help it.
A global economy also opens up more choice. A quick scan of fruit and veg in the supermarket reveals most of it is imported. We have forgotten that organic products are seasonal.
With the disruption to overseas manufacture, supply and imports becoming apparent, it’s time to re-think local. It may cost a little bit more but shopping locally and engaging small business will boost the local economy directly. How many times have you heard of international companies not paying tax? Believe me, HMRC doesn’t let small UK businesses get away with that sort of thing!
SIT AND WAIT IT OUT?
You may be tempted to delay your building/ landscaping project another year or so until things get, back to normal. The only problem with this is, we don’t know what the long-term effects of this situation will be. The industry may need to adjust to a new normal.
Currently, reputable builders are booked up nearly a year in advance. If you wait until next spring to make enquiries, you will go to the back of that queue and could end up waiting longer.
Better to start enquiries now and get something booked in so that you won’t be disappointed. After all, you will have plenty of time to save up!
DO YOUR RESEARCH
Be realistic about what you want and what you can achieve with your budget. If you think a job is worth £5,000 but contractors tell you it will be £10,000, trust them. After all, they are experts in the industry. Putting pressure on the self-employed to lower their prices will eventually put reputable people out of business and will encourage cowboy companies who don’t produce quality work and don’t care.
PERFECT PLANNING PREVENTS POOR PERFORMANCE
Don’t rush. Make sure you fully trust your contractors and understand exactly what you will get at the end of the job. You don’t want to end up paying more for changes or repairs because you’re not happy with the finished work.
Businesses are used to weathering changes and trends, however there is currently a palpable lack of supplies and rise of prices within the landscaping and building industry. For a business owner or small trader, this translates into an unprecedented opportunity to secure long-term work combined with a sudden need for innovation to mitigate increased risks. As a practical
example, you may find more contractors providing contactless quotes or over-estimating time on jobs.
A good, reputable landscaper will have a contract or service agreement in place to protect your rights as a consumer and will be working hard behind the scenes to make sure they deliver what they have promised on time.
The future is always uncertain, but rather than stifling the building industry the current economic climate provides an opportunity for many small businesses to grow, innovate and make more meaningful connections with their customers and local community.