How to Boost Your Trade Business Profits In the New Year
The end of the year is a great time for reflection and evaluation before the start of the New Year. For small businesses, it’s also a great time to look back on the year that’s past and evaluate the progress of one’s business to look at what has worked and what hasn’t over the past year, and what has turned into profits and what has turned into losses. Losing small change on job after job can add up to thousands of dollars at the end of the year, so it’s important to look back and assess, in order to transform your business into a more streamlined source of profit in the New Year.
Get Costs under Control
Most trades’ business underestimate on costs, and this really ends up causing them to lose money and profits in the long term. For example, if your profit margin is 5%, not an uncommon margin for small businesses who want to stay competitive, you don’t have a lot of ‘wriggle room’ if your costs increase and this just results in lost profits. Of course, you could increase your prices to increase your profits, but this often produces fear in business owners of a competitor swooping in and stealing your customer base. If you cut your costs by 5%, you double your profits – an amazing result from a relatively easy change. On the other hand, to double profits through increased sales, you would have to increase numbers of sales or prices by 100%, a much more daunting prospect.
Getting costs under control means being organised, which certainly can be a challenge for many small business owners, who are often caught between trying to work on the jobs, schedule crews or doing work tasks, there’s often no enough time to focus on finances, financial tools and strategies that can really make the difference for your business. One key step that can instantly save you time on jobs and money on losses is acquiring accurate and fast estimating software that will revolutionise your approach to business.
Estimating software has the advantage of reducing labour costs and time for estimating jobs, and can be more accurate in giving a truer reflection of your costs or each job that will help you not only factor these into the price you charge, but also help you reduce unnecessary costs where possible.
Charge for Changes
The nature of trade or construction work means that it often includes changes to the original job plans or goals. This can involve additional or changed scope, price, time, schedule, terms, or work item on a construction project. Most often they require additional money for the additional work required by the change. However, with a construction of repair job, this extra changes can slip through the cracks and not be charged for, meaning you lose money on the change. When the customer asks for a change, it’s important to get it writing, signed and charged for – and it’s important for all the members of your staff to know that too.
Once a change is underway or done, it’s too late, so it’s important to take care of beforehand. The customer has a right to refuse to pay for changes they didn’t agree to or acknowledge in writing before the change was done, so it’s important to stay on top of any changes and make sure all your workers know what to do as well.
Not only is a safe workplace good for you and your workers, research has shown that a safe workplace is a more profitable workplace, where workers can feel secure and be more efficient. While many people may not consider safety and profits to be two concepts that work together in construction and trades, the fact is that safe workers are happier and can work faster and more efficiently according to pre-determined guidelines, which streamlines the job and reduces injuries. Implementing safety measures, procedures and protocols is also fairly low cost, meaning you don’t have to expend money to get a good return and making workplace safety a cost effective measure.
Author Bio: Cara is a writer, blogger and reviewer, specialising in transforming accurate research into exciting writing. Originally from Sydney, Australia, she now travels the world seeking fun and adventure.