Running a profitable tradie business takes more than being great on the tools, using integrated software, having the right systems to allow you to review data and reports and partnering with expert advisors is the best way to drive profits and build the foundations for growing your business.
How can I increase the profitability of my tradie business?
The purposes for starting a business can vary but undoubtedly profit is a huge driver and truly governs the ability for the business to grow and expand. Without the right structure, systems and tools in place many business owners find themselves working harder and harder but “growing broke”. This is a common occurrence and is the reason many businesses collapse.
Traditional profit drivers in business are things like:
- increasing sales
- reducing cost of sales
- reducing overheads.
These are all great but without the right tools to measure and monitor these it’s impossible to know where to start or how much of an impact the changes are having. We need to know the numbers!
The old days of just keeping an eye on the bank balance doesn’t cut it anymore, knowing exactly where you’re at financially and operationally, in real time, means you can make decisions with confidence and focus on the areas of your business that can maximise profit. We’ve found there are 3 tips for driving profits within your tradie business.
3 Key Profitability Tips:
- Collection of accurate real time data for reporting
- Integrated software programs working together delivering the data you need
- Financial advisors to make the most of your figures
The 3 Keys to driving profit in your tradie business:
Accurate Data and Reporting
Excel spreadsheets were great 10 years ago but have massive limitations around data entry, accessibility and useability. Dedicated data collection apps and reporting tools will provide your business with accurate, real time information that you can use for analysis and decision making.
Accounting programs like Xero and Quickbooks are great at the high level stuff like profit and loss across the whole business, but ideally we need the detail down to individual job level.
Tracking key costs will show you whether particular job types are viable to do or how a project is tracking. These include:
- labour costs
- materials .
The data you’ve collected should allow you to compare quoted versus actual costs of a job. Did you make a profit? Did you charge for all materials used? Do you need to adjust your pricing to cover costs in future?
Assessing this data at the completion of each job will allow you to quote better in the future. Only work on jobs which are profitable to your business and devise cost savings in any areas possible. Import supplier lists so you have accurate materials costs on hand for quoting, know your staff salary ranges and penalty rates. All this information is key to helping you build a profitable business.
As mentioned above, your accounting package is great for the high level stuff but to get down to the job level detail we need a suitable job or project management tool. Your job or project management software MUST integrate with your accounting software so there is a seamless flow of information between the two.
A lot of businesses are starting to incorporate sales and marketing tools in the mix as well to monitor marketing efforts and results. Making sure the integration is set up correctly between all these tools is definitely key here to ensure you get the reporting you need as easily as possible. But unfortunately not all integrations are created equal.
Hiring trained professionals like TradiePad to do this side of things for you is highly recommended. All the top job and project management softwares will send payroll data, invoices and supplier bills directly to your cloud based accounting software such as Xero, Quickbooks Online or MYOB, but there is an unlimited number of ways this data can be mapped depending on the reporting you’re wanting to get out.
We’re currently seeing limitations with integrations to some of the sales and marketing tools but sometimes a 3rd party connector like Zapier can be used to get the info where it needs to be. This can be a bit of a tricky area to get right but having all your business tools working together should result in having the info and dashboards you need at all levels of detail.
Expert Advisors: Bookkeepers and Accountants
It has always been a bit of a given that when you start your business you or your missus will do the books. Believe it or not, this is absolutely not the best use of your time and outsourcing this to a specialist can be some of the best money you’ll ever spend. Getting a professional not only ensures that it’s done correctly (because most business owners aren’t trained bookkeepers and usually make a serious mess of things!) but more importantly it allows you to spend time working on areas of your business that will drive profits. WIN WIN!
We know that business finances can be a full on number-fest, and if you’re the type that glazes over when you look at numbers, hiring a good financial advisor will literally change your world. They are trained experts who can help you make sense of the dollars, decimals and digits and actually do something meaningful with all of this awesome data you’re collecting in your amazing system.
Your Bookkeeper or Accountant can help:
- Pinpoint profit centres
- Identify areas of concern
- Suggest cost saving methods
- Advise on tax strategies and compliance will all help to drive your business towards financial security and success.
As we mentioned in the first section collaboration with these types of advisors will turbo boost your business growth and confidence. Knowing your business numbers is one of the most powerful tools you’ll have in your business tool belt.
For more tips on how technology can kick goals for your business, download our
“Game Changing Business Insights” Free Resource.