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Annual Industry Review • 2015 / 2016

Study produced by IronmongeryDirect, the UK’s largest online and mail order supplier of ironmongery products.

Introduction

The construction industry is often a good indicator of the health of the wider economy and what is happening to small businesses. When the economy wavers, construction investment and building projects slow down. However, when the economy starts to recover we tend to see a steady rise in construction activity.

To gain a snap shot of how the industry currently stands, we conducted some research using our database of tradespeople to find out what the industry has been like for trade professionals in 2015 and what predictions this holds for the industry in 2016. Have workloads increased? Have revenues improved? What issues are affecting trade?

Our research surveyed 600 professionals from a range of trades, asking them a series of questions about how business has been for them in 2015. Of the 600 surveyed, 96% were male and 4% female. 61% were sole traders, 23% had 1-5 employees, 14% had 6-100 employees and just 2% had more than 100 employees.

Results of survey

Overall, the construction sector appeared to occupy a very positive position in 2015 as tradespeople across the country declared how busy they were: 52% said very busy, 30% said busy, 14% said average and only 4% admitted they were not very busy.

Exactly half of the tradespeople questioned said that they received more enquiries in 2015 than in 2014. While 43% reported it was about the same, only 7% declared that they had fewer enquiries than the year before.

Revenue increased in 2015

As a result of this influx in enquiries and work, revenues appeared to be strong in 2015. In fact, 72% of businesses reported an increase in revenue in 2015. The majority (43%) said sales had increased by up to 10%. A third said revenue had increased by 11-20%, 16% said it increased by up to 30% and 8% claimed it had increased by more than 30%.

The average hourly rate for 2015 was £27. This was 12% more than in 2014, when the average hourly rate was £24.

The average quote for a job in 2015 was £25,000. 58% said the average quote for a job in 2015 stayed the same as 2014. 37% said it increased and just 5% said it decreased.

High demand for skilled tradespeople

As a result of having a lot of work on in 2015, 45% of tradespeople said that they had to turn business away, which came at a cost to their business. 36% of these tradespeople turned away work with a value of between £1,000 and £10,000, 31% turned away work with a value of up to £100,000, and 13% had to turn away work with a value of more than £100,000. One respondent even claimed that they had to turn away work that had a value of £5 million.

The reasons why so many businesses had to reject work could have been down to a lack of resources and staffing pressures. While 17% took on more staff and apprentices in 2015, a quarter of respondents said they struggled to take on more staff because of the skills shortage.

More businesses need to invest in marketing

In terms of marketing their business to attract more custom, only 16% said they reviewed and improved the business’s marketing strategy in 2015. Of those that did invest more in marketing, the majority made improvements to their website (49%). The other 32% developed their social media strategy, 17% invested in advertising and a small 4% optimised their website to appear higher in search engines. Our marketing toolbox is designed to help tradespeople grow their business.

Builders brace themselves for a busy 2016

When looking to 2016, 61% of trade professionals believe their business’s revenue will increase further. When asked why, some of the most popular reasons included that they have a lot of work already pre-booked for 2016, they are already witnessing an increase in enquiries and demand; and that the market and economy is strong, especially in the house-building sector. 24% also expect to take on more staff and apprentices this year to cope with demand.

When asked about their waiting lists at the start of 2016, only 11% said they could take on a job straight away, 22% of tradespeople said they would be able to start a job in 1-2 weeks, 29% of tradespeople said they would be able to start a job in 3-4 weeks and 17% said in 5-7 weeks. However, a large percentage (21%), said they wouldn’t be able to start for at least eight weeks.

Overall, tradespeople were happy with how business went in 2015 and when asked if they think 2016 will be a good year, a significant 91% said yes. What’s more, 50% reported being extremely happy in their job, and 41% described themselves as happy. Only 2% said they were not that happy (7% said they felt neither happy nor unhappy).

Summary and Conclusion

The UK’s booming property market coupled with a rise in house building and renovation projects certainly had a positive effect on the construction industry in 2015. In addition, George Osborne’s promise of spending £12billion on Britain’s infrastructure over the next five years and the Government’s drive to increase house building, particularly on green and brownfield sites, gives the sector another boost.

And our research appears to correspond. Based on the findings of our survey, business is going well for the majority of tradespeople. Revenues are strong with nearly three quarters of respondents reporting a revenue increase in 2015.

With half of all tradespeople reporting a surge in job enquiries in 2015 than the year before, many are working to capacity and so it may not come as a surprise to hear that just under half had to turn business away because they did not have the resources or time required. For some, this might be because they have struggled to take on additional members of staff due to the skills shortage that is currently affecting the sector.

However, the good news is that growth is expected to continue in 2016 with revenues anticipated to rise further. With over 80% of tradespeople reporting that they were busy in 2015, this has had a knock on effect for 2016 and many will have work already lined up for the first few months of the year.

The results from the survey are extremely positive for the sector and we hope that our report will provide some valuable insight into the industry. It’s fantastic to see that 2016 has started out as a good year for tradespeople. However, that said, it is crucial to still operate with caution as the sector is not fully recovered. While many will be able to be more selective about the work they take on because workloads are increasing, there are still underlying issues that may have an effect such as an increasing skills gap, the pricing of contracts, supply chain issues or even rising capital pressures.

Tradesmen on site

Wayne Lysaght-Mason Managing Director at IronmongeryDirect