How to undertake a market analysis when starting your land surveying business: Land Surveying Business Planning Part 2

In this blog post we’ll be covering how to undertake a market analysis for a land surveying business.

How to undertake a market analysis when starting your land surveying business?

Market analysis is a very important part of any business. It helps you to understand your customers, their needs, and the market trends. Market analysis will also help you identify your strengths and weaknesses as well as find opportunities that can be converted into revenue generation sources.

Identifying the market outcomes is not just about organizational goals but also about finding the gaps in the market and effectively analyze them.

Identifying the market outcomes is not just about organizational goals but also about finding the gaps in the market and effectively analyze them. It is a continuous process that requires you to constantly monitor your business, understand where it stands and how it can be improved upon. Market analysis could be a qualitative approach or an ongoing process that helps you understand your target markets better.

Market analysis is more of a qualitative approach to the business.

Market analysis is more of a qualitative approach to the business. It’s more about understanding the market and its trends, understanding your customers and their needs and understanding how you can outperform your competition.

Market analysis is all about knowing what your strengths and weakness are, what your opportunities are, and threats that you need to overcome.

The first step in undertaking a market analysis is to know your business. A market analysis is all about knowing what your strengths and weaknesses are, what your opportunities are, and threats that you need to overcome.

Or it might not be a great solution to step into this market and you might have to choose a different market to target your land surveying services.

It’s important not just because it’s part of any marketing strategy but also because it enables us as consumers to make informed decisions about what we buy – which ultimately benefits everyone involved!

Six factors that you must consider for market analysis of your land surveying company include, consumer behavior, competitive environment, economic conditions, legal and regulatory factors, technological environment and social cultural environment.

Six factors that you must consider for market analysis of your land surveying company include, consumer behavior, competitive environment, economic conditions, legal and regulatory factors, technological environment and social cultural environment.

Consumer Behavior:
Competitive Environment:
Economic Conditions:
Legal and Regulatory Factors:
Environmental Planning

It requires continuous monitoring of these factors as they can change anytime while you are running your business.

It is a continuous process and not a one time activity. The market analysis will help you to understand the current trends of your industry, which helps you to take decision regarding customer needs and requirements. The key drivers for any business are customers and customer retention. For this purpose, we need to monitor all aspects related to customers such as:

Customer satisfaction level (CSAT)
Customer churn rate (CGR)
Customer complaints per month
Average revenue per user (ARPU)

Talk to customers (or potential customers)

When researching a market, it’s important to talk to customers and potential customers. There are many reasons why this is so:

Understanding customer needs
Understanding customer pain points
Understanding customer expectations
Understanding the level of customer satisfaction with your services

Concluding a strong market analysis will allow you to know what you are doing right and where you need improvement.

Concluding a strong market analysis will provide you with an opportunity to know what you are doing right and where you need improvement. It is important to note that not all aspects of your business can be controlled, but the following sections of this guide will help you understand how to position your business in order to succeed within the market.

Conclusion

The most important thing to remember is that there is no one way to do market analysis. You can choose from any method available, depending on your business and its goals. However, it’s always good to start by defining what you want from the process so that your research will be focused on those objectives rather than scattered around aimlessly looking for answers in all directions at once.

Land Surveying Business Planning Part 1

You can use many different types of company structures to set up your company. For the majority of land surveying companies in the UK they have set up either a limited company, sole trader or partnership.

The whole point of these is to share or limit the liability of the works done. The sole trader is the highest risk and easiest setup, where you would have to do the business under your own name and the liability is unlimited to you. Whereas a company (if setup correctly) can limit the liability so that your own personal assets are not in danger.

The type of business entity you choose will depend on your business needs and the laws in your country (if talking globally).

There are four main types of business entities:

–Public liability Company. This is a corporation, but it’s not publicly traded on the stock market. This type of company is used by larger businesses that want to limit their liability and raise capital via debt or equity financing.

–Limited company. This is a corporation that limits its liability for debts, liabilities, and obligations through state law or charter documents.

–Sole trader. A sole trader is an individual who does business under his or her own name without incorporating as a separate legal entity (such as a corporation). He/she may hire employees or use a professional corporation such as an accounting firm to provide services for him/herself.

–Partnership. A partnership is created when two or more individuals agree to join together to engage in business activities for profit but without incorporating as a separate legal entity (such as a corporation).

Short-term and Long term strategies

Typically when you’re running your land surveying business your need to have an objective to help you set your goals for you as the business owner but also the employees/staff.

The strategies can be just a set of goals that you highlight how you want the business to run. so for example you can have a 5 year plan set out such as:

establish the surveying business as a market leader for SMEs who are turning over <$5m/year
establish an average of 12% margin every year
grow the business turnover to $3m/year by year 5.

Of course, the examples above are just fictional but it gives you an idea of what to think about. You can read more about long term business strategies here and our short-term business strategy here.

Accounting Principles and Procedures Part 4

in this final part 4 of the accounting principles and procedures, we will cover insolvency and credit control. It is something that I am passionate about and hopefully I’ll cover enough from my experience.

Again, this blog is going to cover the accounting principles and procedure RICS competency

What is insolvency?

In a nutshell, insolvency is when your assets don’t cover your liabilities. It’s a term that’s used in finance to describe the financial state of a person or company.

In simple terms, if you owe more than you own, you’re insolvent.

How is it calculated?

The formula for calculating insolvency is: (liabilities – assets) ÷ total liabilities = amount of insolvency. If you’re insolvent, then that number will be greater than zero. If it’s less than zero, then you’re solvent. If it’s positive (meaning your assets are greater than your liabilities), you’re solvent!

What’s the difference between bankruptcy and insolvency?

Bankruptcy and insolvency are similar concepts: both refer to a person or company whose liabilities exceed their assets. However, bankruptcy occurs when this happens over time—you become bankrupt when your debts are too large for you to pay off—whereas insolvency occurs all at once (you become insolvent when your liabilities exceed your assets).

the main difference is that in bankruptcy it is a legal term and will affect your credit score, whereas insolvency is not. Insolvency is reversible if managed and for businesses if it is administered correctly. Bankruptcy it is not reversible it is final state.

Credit control

as part of engaging my suppliers or taking on a client (mostly business) I check their ability to pay and finance their project. One way of doing this is checking websites like creditfocus or duedil to get data about the business.

It is similar to experian report but open to financial checks on the business. I check how good they are at paying their debt and if they have been late on any payments.

Some red flags are many credit checks against the company, their assets are nil, or if they have a CCJ (county court judgement) for late payment against the company. This is all found on the credit check portal so you don’t have to go dig in different places for them.

If you don’t have this information you can always do a liquidity ratio calculation as shown via this link on google sheet.

The reason why you want to check the credit control of the companies you engage is the ability to get paid or even get your job done.

If you engage a land surveying company that does not have a good credit it may mean that your job might not be done or even insured properly if they go down. It is also good to check if the company has a good working capital. This also allows you to calculate if they can support the project. If you have a survey that is estimated to cost £50k over a period of 1 months or so, and their current working capital is £20k a month they will struggle to cover their expense to produce their job. Ideally the company shouldn’t bid or take on these projects.

For land surveying companies, they can check if the clients they engage with can pay them. This is common in the construction industry for companies to go down under, leaving you out of money. I have had this happen a couple of times even with all the checks, but after 2-3 months, the company went insolvent and couldn’t pay their debts. We now check for the ability for them to pay, if they are high risk we ask for payment upfront.

Accounting Principles and Procedures Part 3

In this part 3 of the Accounting Principles and Procedures we’ll be covering Audit and Ratio Analysis.

Audit in construction companies

As a Quantity surveyor, I have been audited by external auditors from the big 4 accounting firms. I think the only one I have not audited by was PwC. But the other three I do recognise them from the 15 years that I’ve been working.

Who is an auditor, and what qualifications does he have?

An auditor is a person who checks the accounts of a business to make sure they are accurate. An auditor must be qualified through the Institute of Chartered Accountants in England and Wales (ICAEW), which means they have passed exams and have practical experience.

What does an auditor do when they perform an audit on a business’ account?

Auditors check that all transactions are recorded correctly, that all transactions are recorded within the correct period, and that transactions are recorded in accordance with legislation. They also check that employees are using proper procedures when making payments and recording expenses. Auditors also check that cash receipts match inventory levels and sales.

They do this because they want to make sure that the business is making good decisions with its money and that it’s not doing anything illegal or improper with it.

As a quantity surveyor we are audited on the margin and values we take into account for our projects. They will check the validity of our changes (variations), the risks of losses, money receipts and procedures.

The majority of the questions are just “can you show me….” or “can I see proof for…”. I usually spend 1-2 days but they are very quiet and there were no warning flags. It is an interesting process to ensure that the company I work for are reporting their figures correctly. Especially against FRS 102; on how to report the revenue of a long term project.

In the standard they cover what you can consider as a change, (must be agreed not assumed), and also consider loss now rather than later. So any potential risk of loss that you are aware of must be reported during your CVR to discuss its validity with your commercial director. The majority of the time they get removed, however, things such as re-works, or damages may be reported as loss on the revenue straight away.

Reason being is that the margins that you report on your CVR are reported to share holders and makes the stock of the business enticing for investors.

Why do you do an internal audit?

We also get audited internally, every 6 months and much more often than the external audits.

In order to ensure that your business is operating effectively internally, you will want to conduct an internal audit at least once a year. We can use this audit as a way to identify areas where the business could improve its operations or save money by cutting costs or avoiding wastefulness with resources like energy consumption or office supplies such as paper.

But the process also identifies and ensures we are doing the right thing for the external audit and we’re reporting the right figures up the line in our CVR.

You can also use it as a springboard for implementing changes within your organization by showing employees how their actions have affected other departments or cost you money in lost revenue opportunities because certain processes aren’t working as

GAAP

Something else you might want to know about when doing your studies is the GAAP, the generally accepted accounting principles. They are set of models/principles to follow to manage and maintain your account. It’s just things you should consider and apply your work towards.

The GAAP are the standards that dictate how companies should measure and record their financial transactions, and how they should report them to the public.

As a QS or land surveyor we don’t really have to do much with it but we just need to know of it for business purposes.

1. Principle of Regularity: It requires that accounting information be presented in a manner that is consistent, reliable and objective. It also states that the same principles and methods should be applied in similar circumstances.

2. Principle of Consistency: It requires that accounting information be prepared on the same basis throughout the period being reported on and any changes in accounting policies or methods are disclosed.

3. Principle of Sincerity: It requires that financial statements include all relevant information about a company’s economic performance, financial position and cash flows.

4. Principle of Permanence of Method: It requires that companies use the same accounting principles consistently over time so that past decisions can be evaluated for their future implications.

5. Principle of Non-Compensation: Companies must include all costs associated with earning revenue and producing goods and services when calculating income from those activities (i.e., cost principle).

6. Principle of Prudence: It requires that companies act prudently when making business decisions, including those related to investing money in long-term assets such as property, plant and equipment because it may take years before those assets generate revenues (i.e., matching concept).

7. Principle of Continuity: The principle assumes that the business will continue its operations in the future.

8. Principle of Periodicity: Various entries are distributed across the appropriate time periods.

9. Principle of Full Disclosure: In creating the financial reports, accountants must be careful to include all relevant information.

10. Principle of Utmost Good Faith: This principle assumes that those involved in the transaction are honest.

While companies that are already subject to GAAP are required by law to report their financial information in accordance with the standard, if you believe the business you work for may eventually grow large enough for its financial statements be held up against GAAP guidelines, it’s wise to start following them now.

Ratio Analysis

The definition of ratio analysis is the comparison of two amounts or numbers. Ratio analysis tells you how much a company earns relative to its assets or liabilities, which can help you determine the overall health of the company.

The three most common liquidity ratios include:

Liquidity ratios measure a company’s ability to pay its short-term debts.

Current Ratio is the ratio of a company’s current assets to its current liabilities. The higher the ratio, the better it is for a company. It indicates that the business has enough current assets to pay off its short-term debt. The Quick Ratio is similar to the current ratio, but it excludes inventory and prepaid expenses from both sides of the equation.

This is the simplest formula current ratio = asset/liability. An example can be found here.

Acid Test Ratio measures a company’s ability to pay its debt with its cash and liquid assets. It is calculated by adding a company’s cash, accounts receivable, and short-term investments together, then dividing that total by its current liabilities.

Profitability Ratios is a measure of the performance of a companies profit. The margin is calculated using:

profit ratio = turnover – (cost of sales/turnover); an example can be found here.