A decline in building permit applications by how many %? Would that break the back of the shell builders?
There are not many alternative options for paving and gardening work either if no one is building and is rather investing their money in heat pumps due to rising prices.
I’m telling you... It’s no secret if you understand the business from the inside.
First of all: Get orders. I have to pay my employees anyway, whether they are picking their noses or at least generating their wages without profit. An employee who makes no revenue automatically causes a loss... and a severe loss. 10% margin... meaning 90% of the price is just the revenue...
That is important to understand why many entrepreneurs also offer below cost during crises. The main thing is revenue.
However, if the crisis progresses, companies begin to gradually take orders below cost to snatch orders away from the competition. Still applies: cash flow must be there. Revenue keeps you afloat... but profit eventually disappears... That becomes dangerous because no company can survive long-term below cost.
I hope... but that is an extremely small hope... that construction companies have built up sufficient reserves in good times. The margin for that was certainly available. My fear... and hope... is, however, that soon thousands of unemployed craftsmen will be released onto the market, who can then be rehired by sound companies... ...because their original companies go bankrupt...
That will happen, and we shouldn’t fool ourselves about that...