Navigating The Economic Storm

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Protect your business and set up for long-term success.

The current economy is impacting a lot of Australian families and in turn, Australian businesses. As electricians, you may be feeling less impacted by economic downturns compared to other industries, especially when we consider that the expected electrician employment growth rate over the next 5 years is 10.2% according to labour market insights. There are also around 10,000 electrician jobs currently being advertised on Seek.

However, this is not to say that the current economy status wouldn’t be having any impact on Australian electrical businesses.

With homeowners feeling the pinch from twelve interest rate rises since April 2022, the demand for residential electrical upgrade projects has fallen and if you’re a residential electrician, you’ve likely noticed job requests from homeowners are shifting predominantly to emergency works.

When looking at the construction industry as a whole, a report by the ABC from March this year titled “Calls for more government action to address rising building costs”, stated that inflation figures are at 6.8% however, the cost of building a new home has gone up by nearly 10%. The ABC also reported in January that new home sales in December 2022 were down 42% compared to the same time last year in a piece called “Building industry faces 'nerve-racking' 2023 amid double-whammy of rate hikes and inflation”. As interest rate pressures worsen, some homeowners have been forced to cancel contracts. Within the construction industry, rising material costs have also been causing many trades to lose money on fixed-price contracts.

Running a business during an economic downturn can be challenging, especially in the electrical industry where demand may decrease as construction and renovation projects slow down. However, there are several strategies that can help mitigate the impact of a recession and keep your electrical business running smoothly.



Tips on how to mitigate the impact on your business:

Diversify your services:
Consider expanding your business to offer a wider range of services. For example, you might offer electrical maintenance services to keep existing systems running smoothly or renewable energy installation services to meet the growing demand for sustainable energy solutions.

Enhance emergency services:
As the demand for residential upgrade projects decline, homeowners may prioritise emergency electrical repairs. Ensure that your business is equipped to handle emergency calls promptly and efficiently. Promote your emergency services to attract customers in need of immediate assistance.

Develop long-term contracts:
Try to secure long-term contracts with clients or customers. This can help provide a stable income stream during tough economic conditions.

Quote your tenders at a profitable margin:
If you quote jobs at a low margin to start with and something goes wrong, the job can soon turn into a loss.

Build strong relationships:
Invest in building strong relationships with your existing customers, suppliers and vendors. This can help you weather a recession by fostering loyalty and support.

Follow up all completed quotes:
If you don’t follow up on your quotes then don’t waste time in doing them in the first place. That one phone call could be the difference between you winning and losing the job. Sometimes the smallest of jobs can turn into your biggest customer.

Manage your cash flow:
During an economic downturn, cash flow is critical. Take steps to manage your cash flow effectively by reducing expenses, monitoring your accounts receivable and staying on top of your invoicing. Job management tools such as Fergus offer automated invoicing services that can significantly assist you in managing your cash flow. We highly recommend Fergus as it’s Middy’s account and payment integrated.

Keep up with industry trends:
Stay up-to-date with the latest trends and technologies in the electrical industry. This can help you identify new opportunities and stay competitive. As leading Australian futurist and Middy’s innovation committee member Steve Sammartino discussed in Issue 39 of the Middy’s MAG, with at least $40 billion worth of Electric Vehicle business expected before the end of this decade, the big opportunity for electrical contractors is EV charger installs.

Consider offering financing options:
Offering financing options can make your services more accessible to customers who may be struggling financially during a recession.

Additionally, if the current economy has impacted your business' hiring or staff retention success, becoming an employer of choice can help to alleviate hiring pressures due to electrical skill shortages in Australia.

Here are some different methods recommended by Western Australia’s Small Business Development Corporation to become an employer of choice:

• Offer learning and development opportunities to employees for growth and professional training.
• Include intriguing benefits and bonuses in hiring packages that attract the type of specialised worker you require.
• Encourage meaningful work-life balance and actively check in with your employees about their well-being and fulfilment.
• Spend less time chasing and more time creating a great workplace that attracts the best-suited workers for your company.

By taking these steps, you can help protect your electrical business from the impact of a recession and position yourself for long-term success.



Mark Carrington, General Manager of Sales at Middy's commented...

"What does the next couple of years look like in the electrical and construction markets? Well, with over 750,000 people migrating to Australia over the next two years and with rental vacancy rates at less than 1%, there will be a massive demand for housing across the country. There will be a challenging period over the next 6 to 12 months as all major builders are reporting heavily reduced pipelines due to high interest rates and inflated building costs, not to mention people’s borrowing capacities have reduced significantly. However, once we get through this tricky period there will be a lot of houses to build creating many opportunities for all. The next challenge will be that we won’t be able to build homes quick enough."

"Once we get through this tricky period there will be a lot of houses to build creating many opportunities for all. The next challenge will be that we won’t be able to build homes quick enough." - Mark Carrington, Middy's General Manager Sales


Information collected from a variety of industry and media sources.