At Tradermate, we offer professional bookkeeping services for tradespeople. We like to speak your language, so keep things jargon-free. We also like to share business, bookkeeping and accounting tips with tradespeople. In this article, we’re talking profit… Everybody wants more of that, don’t they? So, read on for five tips on how to increase profit.
How to increase profit:
1: Count your Costs:
Prices are increasing at a much faster rate than we have seen before, so it’s important that you regularly check on prices for materials.
When you quote for work, let clients know how many days the price is valid for. Add a line that details a minimum percentage increase if the quote isn’t accepted within the timeframe you’ve stipulated.
Introducing this small caveat gives you the flexibility to change the quote should your costs increase. It also serves as an incentive for customers to accept your quote in a timely manner.
There are lots of apps on the market that can help with costing. Some, like ServiceM8, even integrate with our favourite cloud accounting software, Xero.
2: Visualise your Value:
Always identify the areas where you are most valuable to your business. If you’re a great tradesperson but not great with marketing, don’t do marketing! If you try, it’ll take too much of your time and keep you away from what you’re best at, and it’s likely that despite your best efforts, the result won’t have the effect you want it to.
Consider employing a part-time person to cover the jobs you can’t do or don’t enjoy (often one and the same). And remember, outsourcing is your friend. If you need help with marketing, talk to a marketing freelancer. If you need help with bookkeeping, talk to a bookkeeper… Ahem… 😉!
3: Value your Team:
Many tradespeople find staff management one of the most challenging things in running their business. But it doesn’t have to be that way. Your team of staff is one of your greatest assets; so, invest in them, and they will be cheerleaders for your business.
If you need to speak to a team member on a performance-related issue, spend time before your meeting to think about what you are going to say, how you’re going to say it, and how you can jointly work on a solution.
There are lots of other businesses and institutions that can offer help and advice on HR-related issues. There are also some Apps, for instance BrightHR, that can help you with people management.
4: Activate your Ready-made Sales Team:
But I don’t have a sales team; we hear you cry! Except you do… Past clients are unofficially your volunteer sales team. Each time they refer you, it’s a lead you don’t need to generate. So, make a point of staying in touch with them. Send them an email to jog their memory on how great your service was and ask for a Google review. This is a good way to get them talking or thinking about you. Because, they might need some more work or know someone who needs your service.
There are other ways of reconnecting with them. For example, you could send them a letter or postcard on the anniversary that you completed their job and thank them again for choosing you. This is a low-cost, unobtrusive way of contacting them. You could even include an offer they could use or pass on.
5: Finances and Forecasting:
Take advantage of deadlines, chase for money that clients owe and plan your expenses in advance. And always have a reserve fund in place for that great opportunity that might be time-sensitive.
Finally, forecast your finances and work out what drivers increase sales. Is it the number of staff you have? Or the amount you spend on marketing? Whatever it is, work out what would happen to your business if you increased this by 25%, 50% or even 100%.
We hope you’ve found these tips on how to increase profit useful. However, if you have any questions, don’t hesitate to contact us HERE. Stay tuned to our knowledge hub for more tips for tradespeople.