The life of a trade business owner can be complicated. You might still be “hands on” doing jobs, while doing the all-consuming task of running the business. Finding time for a day off can be difficult. So how can you take care of business with less stress?
Firstly, consider how healthy your business is. This is one of the most important things you can do as a business owner. Think of all the measurable aspects of your business and put in place measures to track those metrics. We have put together a list below to assist. Take notes if you can about what you are doing well and what might need more attention.
Do your customer’s pay you on time?
Signs your business could be in trouble is when customers stretch out their payment terms. The bigger the company, the longer they often take to pay, so make sure you have a good mix of small and large companies to keep good cash flow. Customers paying you promptly is often a sign of a healthy business. Customers are also more likely to pay on the spot, or quickly if you make it easy for them to do so. There are heaps of mobile payment options available for tradespeople to accept payments on the go or you could look at setting up a Direct Debit system for larger client accounts.
Are you winning new business?
Repeat customers are great – until they no longer require your services. Continuing to bring in new business will keep your business healthy. It will provide flexibility to your business strategy. You can then be more selective about the jobs you want and your pricing. To track this metric, check the rate of new quotes you win each month, and compare it with a value that would grow your customer base even if you lost some of your existing customers. If you look at your historical figures, you will see how often you lose customers.
Are you employees busy but not burnt out?
Healthy businesses use their employee’s time efficiently. Working them too hard, where they are struggling to get to the next job, may cause their quality to suffer and they will probably look for another employer. An unhealthy warning sign for your business is also to have too much downtime as they will get bored. Set some measurable goals for employees and conduct regular reviews to see if they are meeting expectations and it is a chance to ask them how they are going.
Are customers happy?
Word of mouth counts. All trade owners know that repeat business and referral have a huge impact on a trade business’s bottom line, yet often a big stepped missed is asking a customer what they thought of the completed job. It is difficult for a business to improve or get referrals if there are no measures for tracking your service’s performance.
Consider implementing formal and informal ways of tracking performance. You could talk to your customers after a job is complete (ideal for building relationships too) or follow up with a feedback questionnaire form. Ask them what they liked about the service and what could be improved. Over a few months you will soon get an idea if anything is standing out as an issue for your service or for your employees. Also take an extra minute before a job by asking a new customer how they found out about you.
Are you on Trend?
It is important to stay up to date with what is on-trend, especially if you work in the building industry. Keeping up with trends will help you identify business growth opportunities and assist in helping you understand what your customers expect from a job.
Are you making money?
In slow periods, it can be hard to hit profit goals, however if you are always lowering your profit margins to remain in business, then you probably will not be in business for much longer. Make the hard decisions now to keep your overheads low to meet monthly profit goals. You may also want to create a Cash Requirements Forecast, which helps you get an idea for what fixed and variable expenses you will incur, verse money in your account and money coming in.
Is your marketing strategy working?
How are your customers finding out about your business? Is your current promotional strategy working, or are there things you are spending money on that you should scrap? Better understanding your customer, looking at what your competitors are offering, and targeting your customers through the right channels all play a key in getting you more work. If you do not have a website, consider it as more and more people use the internet to help inform who they choose for their jobs. Also ensure your Facebook page is up to date and invest in some Google AdWords.
To keep your business healthy over the longer term, you need to:
- Plan ahead
- Set measurable goals
- Reach those goals consistently.
Setting goals for each metric is a great start, and a business professional will be able to help you set up and track these measures, and others, more effectively, along with helping you to develop a strategy if you want to aim for bigger goals.
At Trade Advisory Group, we are trade business experts who have been in your shoes before. We are your business partner, who will work right alongside you to ensure a healthy business. Call us on 07 3607 6348 or email email@example.com to organise a confidential, free chat.