How do you plan to grow your business? Where do you want your business to be in five or 10 years’ time? How do you ensure your business is working to support your lifestyle goals? Hear some stories from the successful tradies we've worked with!
Business planning is not a new concept, but the majority of trades-based businesses have never taken the time off the tools to put together an effective business plan. How do you plan to grow your business? Where do you want your business to be in five or 10 years’ time? How do you ensure your business is working to support your lifestyle goals?
The trades and construction sector can be high stress, high pressure, but it can also be a rewarding industry that allows you to live your lifestyle of choice. We’ve worked with many successful tradies who have successfully taken on the challenge of positively changing their business, and we’re excited to share some of their success stories with you.
Good things come to those who plan
Matthew Jones, author of Power Up Your Tradie Business, says your goal as a business owner is to build a profitable and sustainable business that satisfies your personal goals. To achieve this, be wary of the tradie mindset way of thinking, where you only need to work hard on the tools and by default, your business will be successful. Take Brad for example. Brad was a one-man band plumbing maintenance business who wanted to grow his business and create a healthy financial return on his investment. After locking in a 3-year profit plan where price was based on profit required, implementing processes that freed-up Brad from doing every task and recruiting a team that believed in Brad’s vision and values, Brad was able to grow his operating profit (after drawing a wage) from -$2,000 in year one to $192,000 in year three. Whilst it’s not easy to achieve a performance turnaround like this, the sooner you take the time to plan and then execute the plan, the sooner you will be satisfied your investment of time and money will be worthwhile.
Understand your business financials
Work smarter, not harder. To do this, you need to know what your break-even point is, and work out what you need to charge your customers to allow you to make profit.
Max ran a general maintenance business and was struggling big time. His business had tripled in two years and had clients banging at his door but as soon as the money hit the bank, it was gone again. Max had been using price to grow his business and was reluctant to increase his rates, in fear of losing customer to cheaper competitors. After spending time calculating his break-even point at $74/hour, it was clear his $70 charge-out rate and 10% margin on materials meant he was losing money with every job he did. Max increased his hourly rate to $85 and increased his material margin to 30%. As a result, he lost cheap clients, leaving him more time to attract better clients, meaning profit increased, he had money in the bank and fewer headaches.
If break-even and profit margin sounds like another language to you, we’re running a small business financials seminar that will put you in the driving seat of your business, knowing exactly what all those numbers mean.
Review your systems and measure results
Invest time to monitor your business performance, from the systems you use, to the team you employ, and the customers you attract. A commercial and maintenance company had a big focus on sales and getting the job done, with a healthy turnover of $8 million over three years. A complete change of focus shifted decisions from being reactive and putting out fires to a focus on profitability and detailed financial information. After 12 months the company saw profit grow by 300% and cash flow dramatically improve, even though sales has dropped. This was achieved by implementing financial systems and process including a financial scorecard, customer profiling, monthly performance reviews and cash flow forecasting.
As you’ve seen in the above examples, a small change in how you approach business can have dramatic results. It certainly pays to take time off the tools and work smarter in your business, not harder. We’re excited to have partnered up with Telstra Trades Assist to help make it easier for you have the financial data that you need to make sound business decisions. Complete the form below to learn more about Telstra Trades Assist and to take advantage of a 30-day free trial.
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