Digital boost needed for the recovery of builders and tradies

digital evolution

Recent data coming from MYOB in its latest Small Business Health Index has shown the adverse of impact lockdowns on the building and construction sector.

The data shows that as of 22 October total invoice creation was down 31 per cent, gross pay was down by 23 per cent and employment was down by 16 per cent compared to baseline.

“These insights are particularly important for our industry as we move forward out of lockdowns,” Denita Wawn, CEO of Master Builders Australia, said. “COVID has been an accelerator of existing trends such as digitisation and has provided tangible evidence of how low levels of digital uptake hurts small business in our sector.”

The data highlights this fact, with invoicing is down across the board and the lockdowns making in-person invoicing even more challenging. It reveals how businesses with low levels of digitisation have also been exposed as less resilient.

“As the Prime Minister highlighted prior to the Federal Budget, ‘one of the biggest challenges and opportunities turns on how we respond to the digital transformation’,” Wawn said. “We are working government on how they can support our industry to do so.

“MYOB modelling shows there are nearly 80,000 SMEs in the construction industry alone with no or very low levels of digitisation of their business processes. Businesses located in regional areas have less access to business and employee support services,” Wawn added.

“We know that the greatest current challenge for SMEs in construction is managing cashflows given the stresses caused by supply disruptions, COVID delays and a mini housing boom which has meant SMEs have had to take on more work than usual. MYOB data shows that one of the greatest benefits of digitisation for SMEs is better cashflow management,” Wawn said.

“Digitisation will help small building businesses to better manage their projects so they can more accurately factor in the costs of building products and specialist tradespeople into their quotes. Digitally advanced SMEs are 50 per cent more likely to succeed in growing*. Supporting SMEs to become larger businesses will be increasingly important if the construction industry is to expand and address structural shortages in housing supply and infrastructure.

“With the construction industry home to more SMEs than any other industry, meaningful digital adoption will have perhaps the greatest impact in business recovery and improving business resilience,” Wawn concluded.

*Deloitte Access Economics 2017