Equipment World Digital Magazine
Issue link: https://read.dmtmag.com/i/136260
ARE YOU POISED TO FAIL? Construction companies fail at a higher rate than other businesses. Learn what to look out for before it's too late. Know your Business series, Part II H e overinvested in equipment. He bought too many shiny new trucks. He borrowed a lot at the wrong time. He didn't know how to manage money. The work just dried up. Sound familiar? If you're a contractor who made it through the recession, these are some of the reasons you hear explaining why some of your competitors are no longer your competitors. If it seems a lot of construction companies are going under, it's because they are. According to Dun & Bradstreet, construction companies represented the biggest percentage of failed businesses globally in 2012, and the second largest proportion in the United States. The first question you may ask (well, after questioning why a sane person would go into such a risky business at all) is "Why?" The answer isn't a simple one. In addition to the recognized problems that sink small businesses overall – insufficient capital, overinvestment in fixed assets, poor credit arrangement management, personal use of business funds, unexpected growth and competition – construction companies also face a separate set of risk factors. According to a 2010 study [Business Failure in the Construction Industry: a Critical Review and a Future Research Agenda, Wong and Ng], construction firms are particularly vulnerable to failure because of the fragmented nature of the Construction University is produced by Equipment World and presented by Case Construction Equipment continued EquipmentWorld.com | June 2013 63 EW0613_Construction U.indd 63 5/29/13 3:17 PM