17th March, 2021
No matter whether you’ve had your trades business for years or you’re still only in the startup stage, it’s vital to keep track of your venture’s ‘health’ at all times.
It’s easy and natural to get caught up with day-to-day busyness no matter the line of work. But you should also take time out to pause and examine the state of your business, especially when the business environment is changing, or before you need to make significant changes.
After all, everybody knows you should measure twice, cut once. The same is true when it comes to managing your business venture.
There are many things you might consider when looking into the wellbeing of your business, beyond the basics of whether or not you make more money than you spend.
If you really want to make sure your business is fighting fit and ready for anything 2021 can throw at it, here are five key factors to look into.
During a business health check, ask yourself how often you get paid on time and in full.
It’s important for cashflow and business longevity that you receive proper payments from customers speedily.
Too many clients stretching out payment terms or not responding to invoices at all? Your business could end up in trouble.
If you’re struggling to get paid, take steps to improve the situation.
Make sure your invoices clearly show, in a prominent spot, both due date and payment options. You don’t want anyone to have to go looking for information.
Also, invoice promptly after you finish a job, and send out regular reminders to your clients if they haven’t paid by the due date.
Don’t do more work or go buying materials for large clients until they get up to date with their invoices.
Plus, if you deal with many big companies, such as builders and developers who tend to take their time paying, consider looking for a better mix of small and large customers to improve cash flow.
If you have a team helping you, such as other tradespeople, apprentices, and in-house administration staff, pay attention to how happy they seem.
Do they appear busy but productive, or are they overworked, stressed out, and making mistakes? Do they keep calling in sick or asking for too many days off work?
You want your staff to have enough work to keep them focused, optimally challenged, and motivated, but not so flat out that it affects their physical and mental health.
A successful trades business has an effective team that works well together and can be relied upon.
Check in regularly with your employees or contractors to see how they’re doing and ensure everyone is on the same page.
It helps, too, to establish measurable goals for them to strive for.
For your trades venture to keep chugging along nicely, you must make enough of a profit margin in your work.
It can be tough to hit this goal at times, especially during turbulent years like 2020, but that’s why you have to stay on top of financial data.
Be wary of lowering your prices too much to get new customers as there’s no point working if you’re not going to make enough out of a job.
Look for ways, too, to lower your overheads, such as by finding more affordable suppliers or spending money only on marketing tactics that bring in a solid return on investment.
A prime sign that your business is healthy is receiving consistent referrals from satisfied clients who rave about you to their friends, family members, and colleagues.
Most people looking to get work done ask the people they know for recommendations, so this can be a great way to land new business.
It doesn’t cost you anything and can lead to an influx of quality clients.
You also want people to be so pleased with your results that they go online, on social media sites like Twitter, Facebook, Instagram, and Google, to leave reviews and post photos of the work.
Don’t forget, though, that there’s nothing wrong with asking people for referrals and testimonials.
When you’ve finished a job, mention that you love getting feedback from clients, and you’d appreciate hearing their thoughts.
Send people a link to your business Facebook page where they can leave a review, or encourage them to post on their own social media pages or places such as Google and Yelp.
When you see these shout-outs pop up, share them with your social media followers, and add them to your website for increased traction.
A healthy business is compliant and up to date on the paperwork side of things.
Consider where things stand for you right now. Do you need to apply for or renew a license or membership? Are you way behind on your staff payroll or superannuation payments?
What about BAS and tax? Is your accountant chasing you for information?
Is it high time that you learnt about marketing, completed that certification you started, or arranged for a team member to engage in some training?
If you answered yes to any of these things, commit to ticking them off your to-do list over the coming months.
Keep in mind that you can outsource some jobs and use helpful software programs, too.
For example, MYOB’s handy payroll tools make this business function quicker and easier for you, and help keep your employees happier to boot.
Developing a healthy business takes time, effort and energy (and it rarely happens overnight), but focus on the five areas listed above and you’ll soon feel more in control of your trades business’s future.
Is it high time you got your business finances sorted?
With another unusual year upon us, we invite you to register for this virtual event and get ahead of the curve with your business finances in 2021. Learn what to review and how to plan and adapt in unpredictable times.
Attend this free webcast on Wednesday 24 March at 2pm AEDT from MYOB and SmartCompany to discover how to understand the most impactful financial reviews you can undertake and plan for a changing future.