There are many reasons why a building company in New Zealand might go into liquidation. Some possible reasons include financial mismanagement, failure to complete projects on time, failure to pay debts or taxes, and failure to meet safety regulations.
In some cases, a company may go into liquidation as a result of market conditions, such as a recession or a downturn in the construction industry. It is also possible that a company may go into liquidation due to external factors such as natural disasters or changes in government regulations.
Proper financial management:
This includes accurately tracking income and expenses, setting realistic budgets, and avoiding over-extending the company
financially. It is also important to have a strong financial plan in place, including a contingency fund for unexpected expenses.’
Have a good accountant who you treat as your best friend, sit down regularly and track expenses, profits, cashflow and your pipeline of work.
Timely project completion:
Meeting project deadlines is critical for the success of a building company. To ensure timely completion, it is important to have a clear project plan in place and to allocate resources appropriately. It is also helpful to have a process in place for addressing delays or unexpected issues that may arise
It is important avoiding taking on too much debt, as well as paying debts off in a timely manner. It may also be helpful to negotiate with
creditors to come up with a repayment plan that works for both parties. Make sure you dont over commit and have too many business out goings, always plan for a rainy day and have a slush, war chest, money aside fund to get you out of trouble if need be. It will help you sleep at night and feel more confident.
Compliance with regulations:
Building companies in New Zealand must adhere to various regulations, including health and safety regulations and
building codes. Failing to meet these regulations can result in fines and other penalties, which can put a strain on the company’s finances. To avoid these issues, it is important to stay up-to-date on all relevant regulations and to have systems in place to ensure compliance.
Strong customer relationships:
Building a good reputation with customers can help a company attract new business and keep existing customers loyal. This includes being responsive to customer needs, providing high-quality work, and being transparent about costs and expectations. Always keep in check with your current customers, past customers and don’t be afraid to ask for referrals. Its how business is done.
Diversifying the types of projects a company takes on can help educe the risk of financial instability. For example, a company that only works
on residential projects may be vulnerable to a downturn in that market, but a company that also works on commercial projects may be more resilient. Always be looking at how you can improve your business, how you can add another stream of income to your business, what types of jobs pay quicker and have higher margins.
It is important for building companies to assess and manage risks, both financial and non-financial. This includes identifying potential risks, developing contingency plans, and implementing controls to mitigate those risks.
By following these strategies, building companies in New Zealand can reduce the risk of going into liquidation and increase the chances of long-term financial stability. It is also important for companies to regularly review and adjust their strategies as
needed to ensure they are well-positioned to meet the changing needs of the market.
Thanks for reading,
Rapid QS Team