HOW TO SPREAD RISK AND PREPARE FOR ANYTHING

If the last few years have taught us anything, it’s that the only thing certain, is change. Changes in the business environment, laws, and economy both globally and locally, can cause shockwaves within your trade business.

So the question needs to be asked — have you spread risk across your trade business to withstand tough times?

We outline how you can do that with The Power of 3 vs 1™ below…

Industry

What industry are you in? Plumbing, electrical, building or other? Most of you will just have one answer for this, however dual trade businesses will have a couple. There is no real risk here and therefore no action, but it needs to be said as each trade business will belong to a particular industry.

Market

This is who you work with… strata, real-estate, residential, commercial, or other. Lots of trade businesses only work in one market segment which is super risky. Imagine work from that segment completely drops off, then what? To spread your risk, you want to work with three different market segments for example 50% residential, 30% builders, and 20% real-estate.

Customers

Who are your specific customers within your market segments? You’re in risk if for example, a large portion of your work is in real-estate but you only have one real-estate branch on your books. You must have minimum three customers per market segment to spread your risk. The only instance this doesn’t apply, because you’ll want a lot more than three customers in this case, is if you do residential work.

Contacts

Again, this is a flow on from customers and markets. We’re going one step further and naming specific contacts you have at each real-estate, strata, builder etc. For example, if you work with strata, what is the strata managers name and contact details? What is their colleagues name and contact details incase (example) Sarah who you’ve only been in contact with, leaves? Ensure you have three contacts.

Products & Services

Do you understand your three most profitable products and services? I’m not talking about the low dollar jobs like taps and toilets for all you plumbers out there. It’s the BIG items like blocked drains, or switchboard replacements for electricians. Whatever it is, you need to make sure that you understand the three most profitable products and services that are required by your market segments, because that’s the work they will be asking you to complete.

Skill set

Your products and services will then dictate what skill set your team requires to complete the work. It might take some training for your staff to master the services you provide, but it is risky to not have everyone trained in these processes in case someone leaves the business, is sick, or is already busy on that particular day.

Team

As you start to grow in your business, it is important to have a minimum of three tradespeople employed in the business; because if one is sick, or one on holidays, you’ve still got two others to get the work done and keep money flowing into the business.

Pricing

What is your pricing model, hourly rate or flat rate? And do you charge all customers across all market segments the same pricing? Reducing risk here means understanding your hourly rate and how to profitably price for your business.

The important thing to remember here, is understanding how to reduce your RISK EXPOSURE across the business, so that you feel confident about every decision you make and can survive ANYTHING!

If you want to learn

MORE about spreading risk in your trade business, click HERE or scan the QR code to tune in to Andy and Angela’s episode of The Tradie Show, Spread risk in your trade business and survive ANYTHING!

Death of paperwork

How many times can something let you down before you finally make the commitment to move on? In the case of manual paperwork, it seems like many tradespeople across Australia aren’t quite ready to say goodbye just yet. Make no mistake, though; forward-thinking trade business owners are jumping ship to digital options in their droves. However, the push to digitise isn’t an industry-wide phenomenon, and plenty of professionals are happy keeping physical records and running their business on paper.

BUT WHY?

Computers and other digital devices have completely transformed how we record and access information in just a few decades. To the point where on-paper methods we used just a few decades ago feel antiquated by comparison. Nobody doubts the influence of digital business operations anymore, just like nobody called the steam engine or the television a fad once they became an inseparable part of everyday life.

As customers, we interact with paper replacements nearly every day. We pay our rent, phone bills and other utilities online, then receive a digital invoice as a record of the transaction. We even buy clothing, pet food and other essentials using digital shopping platforms, all backed by an extensive digital paper trail, but without a single A4 sheet ever changing hands.

It’s not a matter of tradespeople being left out either. The digital door is wide open to trade professionals, and there are digital options for every type of trade business administration and record-keeping process, tailored to your industry and available in the marketplace right now. Most industry-standard software options include digital job management, cloud storage, mobile payment methods, and CRMs, which require no physical paperwork once fully enabled across a business.

Yet even in the face of an overwhelmingly superior option, paper persists.

Many tradespeople still choose to keep their business on paper, and to understand why we need to look at how entrenched in our lives paper has been up until very recently. Two thousand years of use has enforced paper as standard practice, and when there’s money involved (namely business profitability), we stick to what we know.

Paper is a simple medium compared to its digital peers, and its simplicity is its ultimate strength. Paper performs the tasks we require without training or further understanding outside of how to read and write. Digital tools, on the other hand, require a deeper level of knowledge to even begin the task at hand . This is why when you ask a trade business owner why they haven’t moved from manual paperwork to digital, they’ll likely tell you it’s “Because it does the job, everyone understands the processes, and it’s not worth the time learning something new”.

Changing such a mindset can be difficult, and it’s often tricky to put forward the right benefits to convince a stubborn paper user that the opportunities offered by a digital replacement far outweigh the cost of change. But like most things trade business-related, the battle for digitisation is won by showcasing to a resistant tradesperson the wealth of efficiencies that digital has over paper.

An end to lost or damaged paperwork, a filing system that doesn’t take up half the office, and no more dealing with illegible handwriting. Thousands of years ago, we shifted to paper because the alternatives offered by cave paintings and carving our shopping lists on stone weren’t great. Now it’s time for paper to become the lesser alternative, and resistant trade businesses need to look at what’s replacing paper and adapt to stay competitive in their market. Luckily, the options afforded by digital record keeping have covered virtually every need a trade business once had for paper. If you dream of streamlined workflows, faster payment for services rendered, improved operational efficiency and a clear business strategy, then digital holds far better prospects for your business than paper ever will.

But don’t hesitate. As more trade businesses make the jump, those who remain on paper will increasingly risk being left behind.

We hear it all the time, the trade business owner is running around like a chicken with their head cut off, working day and night, and because they’re so busy they think “I’M KILLING IT!”

Then, at the end of the month, quarter, or year, they check in on their back account and find it’s EMPTY and there’s nothing to show for their hard work.

They’ve connected the fact that they’re busy when profitable, but just because they’re working hard doesn’t mean they’re working smart and making any profit. The problem lies in the fact that TURNOVER (busy with MANY jobs) does not equate to PROFIT.

To truly earn profit, you need to… Check your hourly rate

WORKING YOUR A** OFF BUT NOT MAKING ANY MONEY?

Discover how to price for profit once and for all

How did you choose your hourly rate at the very beginning? For most, they look at what their old boss charged, or what their mates and competitors are charging, and pull a number out of thin air.

The reality is, this is rubbish. If you didn’t calculate your hourly rate based off a few things like overheads, wages, and other expenses, PLUS add a profit margin on top of that, you’re NEVER going to make money.

To take it back to basics, think about how you build a quote.

Time Materials

Additional Services Margin Price

If we unpack what this actually means…

Time is literally what it costs the business for a tradesperson/s to be on site to complete the work. If it takes 1 trades 8 hours to complete the work, times this by the rate you charge per tradesperson, NOT the tradespersons hourly rate because you still need to cover superannuation, insurances, sick leave, annual leave, and more. Not to mention the overhead costs of the business like marketing, rent, bookkeeping fees and so on.

Materials is the RRP of everything the business supplies to complete the work plus a margin.

Additional services includes things like skip bins, any equipment you need to hire, council fees, or any external contractors like traffic controllers.

Margin is the profit you will make on TOP of the costs of the job. You aren’t in the business to break-even, so don’t.

… you will probably discover that you’ve been undercharging your customers for WAY TOO LONG!

SO DO YOU WANT

TO CONTINUE TO DO

UNPROFITABLE WORK?

If your answer is NO, scan the QR code or click HERE to discover Andy and Angela’s tips on how to price for profit in your trade business.

The phone ringing whilst you’re on the tools, under a house, in the roof, working your a** off… can be SUPER ANNOYING!

If you’re in the start-up phase of your trade or contracting business, answering customer phone calls is something that you look forward to. You’re HUNGRY for work and fall over yourself answering it with a big smile on your face and your best phone voice on.

But, the calls keep coming, and coming, and coming. Over time, you become sick of it, and think “ARGH! Not the phone AGAIN!”

Your interest in chasing the lead is gone, and you perhaps become complacent in how you answer the phone, or if you even do answer it. The result? You’ve lost the lead.