Business Health Check – Commercial Building Industry

The Business Health Check – Commercial Building Industry provides accounting firms with a comprehensive collection of industry-specific resources for evaluating the financial and operational performance of a commercial building business.

The package is designed to support the complete advisory engagement — from identifying the client’s needs and gathering information through to detailed KPI analysis, financial evaluation, reporting and an agreed action plan.

Industry-Specific Business Health Check Workbook

At the centre of the product is the Commercial Building Industry Business Health Check Excel workbook. It contains linked Data Required and Key Performance Indicator worksheets specifically developed around the operating characteristics of a building business.

The Data Required process gathers information across areas including:

• Days worked and days lost through weather or other interruptions
• Customers, prospects and enquiry sources
• Sales and income
• Sales dissection across different types of building work
• Charge-out rates
• Building-industry income statistics
• Hours the business operates
• Quotation activity and results
• Cost of goods sold and gross profit
• Working owners and principals
• Employees and labour costs
• Key subcontractor costs
• Stock, inventory and work in progress
• Balance Sheet information
• Operating expenses
• Profit and Loss information
• Expenditure with major suppliers

Commercial Building Key Performance Indicators

Information entered into the workbook flows through to a linked Key Performance Indicators report, allowing your firm to analyse the commercial and financial drivers behind the client’s results.

The KPI report covers areas including:

• Sales analysis
• Sales dissection
• Customer information
• Gross profit analysis
• Overall business analysis
• Wages and salaries
• Operating expenses
• Profitability
• Staff performance
• Charge-out rates
• Supplier analysis
• Productivity
• Trade-cost analysis
• Balance Sheet ratios
• Broader financial analysis

This provides your adviser with a structured basis for discussing not only what the financial result was, but what operational factors may be driving that result.

Analyse Different Types of Building Work

The resources allow income and gross-profit performance to be examined across different categories of building work where the client’s records allow that level of analysis.

Examples identified within the material include:

• Renovations
• New houses
• Garages
• Industrial warehouses and buildings
• Office buildings

This can help your firm and the client identify whether particular types of work are contributing more strongly to sales and gross profit than others.

Charge-Out Rates, Quotations and Productivity

Commercial building profitability can be heavily influenced by labour recovery, quotation success and the productive use of the team. The Business Health Check includes specific information and KPIs for examining these areas.

Your firm can use the resources to discuss:

• Current charge-out rates
• Changes in charge-out rates between periods
• Quotation activity and outcomes
• Employee and owner working hours
• Labour productivity
• Key subcontractor costs
• Trade costs and unit costs

This creates an opportunity to identify whether pricing, labour recovery or operating efficiency may be contributing to margin pressure.

Work in Progress and Working Capital

The product includes a dedicated Working Capital Evaluation together with supporting papers covering debtors, stock and work in progress.

The working-capital review can examine:

• Debtors and aged balances
• Debtors’ days outstanding
• Stock and inventory investment
• Stock-turn measures
• Work in progress investment
• Work in progress days
• Creditors and payment periods
• Bank balances and available facilities
• Overall working capital
• Current-ratio performance

For building businesses where significant cash can be tied up in WIP, debtors and project costs, this analysis can provide an important foundation for discussions about cashflow and funding requirements.

Break-Even and Financial Analysis

A dedicated Break-Even Calculation resource helps your firm assess the level of activity required for the business to cover its operating costs.

This can be used alongside the wider KPI analysis to discuss the relationship between:

• Sales
• Gross profit
• Operating expenses
• Fixed costs
• Required activity levels
• Targeted profitability

Ratio Analysis

The package includes a Data Required form and Ratio Analysis Report together with supporting papers covering Trading and Profit & Loss ratios and Balance Sheet ratios.

These resources allow the Business Health Check to incorporate a more traditional financial-ratio review alongside the industry-specific operational KPIs.

Benchmarking Support

Benchmarking resources are included to help your firm compare the client’s performance with available external industry information where suitable data can be obtained.

The supporting material includes benchmarking guidance for accountants and advisers together with information relating to Australian Taxation Office small-business benchmarks.

Benchmarking can then be considered alongside the client’s current results, historical performance and budget expectations when discussing areas requiring attention.

Business Valuation Resources

The Business Health Check can also incorporate a review of business value where this forms part of the agreed engagement.

Supporting resources include:

• Calculation of Future Maintainable Profits workbook
• Business valuation reference material
• Valuation worksheet for businesses that have developed new products, processes or services
• Supporting material on selected emerging-company valuation methodologies

These resources can help extend the client conversation from current trading performance to the longer-term value being created by the business.

“What If” Sales Scenarios

The included What If Scenarios – Sales Targets workbook allows alternative assumptions to be modelled so the client can see how changes in business activity may flow through to sales and gross profit.

Scenarios can consider changes to factors such as:

• Customer numbers
• Average sale values
• Frequency of transactions
• Gross profit percentages
• Sales targets

This turns the Business Health Check from a purely historical analysis into a more forward-looking discussion about potential improvement strategies.

SME Needs’ Analysis and Initial Client Discussion

The package includes an SME Needs’ Analysis questionnaire that can be used to identify the client’s concerns and determine the areas in which they may want further advice.

This provides a useful starting point before the detailed Business Health Check is scoped and helps ensure the engagement is focused on matters relevant to that particular client.

Scope, Quote and Manage the Engagement

The Business Health Check is designed to be delivered as a defined professional advisory assignment. Practical engagement resources are included to help your firm establish the work before analysis begins.

These include:

• Commercial Building Industry Procedure Control Form
• Work Programme/Budget/Quotation Form
• Work Programme Timetable
• Business Health Check proposal
• Assignment Control Form

The Work Programme allows your firm to identify the individual analyses and sub-reports that will form part of the engagement, allocate team members, estimate hours and develop the quotation before presenting the proposal to the client.

Business Health Check Report and Action Plan

The package includes a Business Health Check Report template for bringing the different areas of analysis together into one client-facing deliverable.

The report can incorporate findings from:

• Key Performance Indicators
• Ratio analysis
• Break-even analysis
• Working-capital evaluation
• Benchmarking
• Business valuation
• “What If” scenarios

The process then concludes with an Action Plan documenting the priorities and actions agreed with the client following the review.

A Repeatable Commercial Building Advisory Service

Together, the resources give your firm a structured system for evaluating a commercial building client from both a financial and operational perspective.

Instead of relying on a general review of annual accounts, your team can gather building-industry data, calculate relevant KPIs, examine margins, labour recovery, quotations, WIP, working capital and profitability, test future scenarios and present the findings through a defined report and action plan.

This provides a practical way to turn industry knowledge and financial analysis into a repeatable business advisory engagement for commercial building clients.