Pragmatic construction-business owners expect continued challenges, but they are overall optimistic about the upcoming peak season.
That’s one of the findings of research by Nationwide, the Columbus, Ohio-based insurance company.
After nearly a decade of continuous industry growth, construction business owners experienced severe declines to their companies’ revenue, project completions and new bids, and workforce, as the pandemic took hold in 2020. New Agent Authority research from Nationwide revealed 7-in-10 construction business owners were negatively affected by COVID-19. And although a myriad of these challenges remain in 2021, most owners are optimistic about the strength of the upcoming peak season and their business’s ability to get back on track.
Nationwide’s research uncovered three key themes for construction business owners and the commercial agents who serve them:
Like many other industries, the construction industry battled direct and collateral effects from COVID-19:
• 70% of construction owners were negatively impacted by the pandemic, experiencing the biggest hits to total revenue (52%), their company’s ability to bid on new projects (45%), and their workforce/employee headcount (37%).
• The pandemic also emphasized the need for increased planning, as more than 1-in-5 business owners lacked plans to help their businesses operate through economic uncertainty:
- - 27% didn’t have proper plans in place to successfully navigate project site shutdowns/re-openings.
- - 24% didn’t have a business plan to account for a potential recession.
- - 23% didn’t have enough employees or subcontractors to meet project demand.
Most construction business owners said they accelerated new strategies or re-evaluated areas of their business to account for the pandemic’s impacts – nearly 90% changed their operations for business continuity or increased efficiency. In many cases, the tightening labor market has also forced them to relax screening criteria for new hires. In fact, 70% of business owners said they have, will or may relax new hire screening criteria and drug testing practices to account for a lack of qualified candidates.
Near-term uncertainty is strong among owners as 79% are worried about meeting their 2021 revenue goals and 76% fear lower customer demand due to an economic recession. Despite their concerns, however, 84% of owners are optimistic about the strength of the 2021 upcoming peak season and their business’s preparation to meet increased demand.
• 85% of construction business owners have changed at least one of their insurance policies, but three-quarters are still worried about having the right policies in place to protect their business.
• While concerns remain, owners believe the economy and their company’s performance will increasingly improve over the next year:
- In the next 6 months, 48% believe the economy will improve and 67% believe their revenue will improve.
- In the next 12 months, 60% believe the economy will improve and 75% believe their revenue will improve.
(Nationwide commissioned Edelman Intelligence to conduct a 20-minute quantitative online survey among a sample of 200 U.S. middle market construction business owners between January 5 – January 14 to explore the actions business owners have taken as a result of COVID-19, understand their outlook on the 2021 peak season and the challenges they’re facing, and gauge their experience working with insurance agents and buying or renewing insurance policies. For the purposes of this survey, middle market construction business owner was defined as anyone who self-reported as being a sole or part owner of a construction company with either 25-500 employees or $10M-$500M in revenue or 20+ fleet vehicles. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.)