"Tradie Talk: Work Smarter not harder to get off the tools"

Tradie Talk: Work smarter not harder to get off the tools

Being a tradie is a tough job, it's physical work, the hours are long, and they can be even longer when you work for yourself.

When you're starting out, there's a good chance your first business plan was a bit of 'suck it and see'. When it got busier you might have taken on a few guys, but you were probably still on the tools and suddenly faced with the admin of running a business.

"Most businesses start small, more on the basis of let's see where it takes us rather than this is where we are going," says Neil Dixon of Brisbane electrical contractors, Storm Electrical. Before you know it, you're doing two full-time jobs, working 24/7, and wondering why you're not making any money now that you're the boss. Often, you take home the smallest pay packet and all the responsibility and risk and your workers go home after a day's work to relax and chill out.

Running a business isn't rocket science, but keeping things ticking over means you need to be organised and have a plan. Getting off the tools means working smarter and not harder. 

Build a budget and a cash flow plan

If you want to know how much it costs to run your business and make a profit, you need to write it down and keep it up-to-date. Whether it's the latest online accounting software like MYOB or Xero, or just a simple spreadsheet or cashbook, a budget and a cash flow plan are the tools you need to master. Then you'll always know what's going on no matter how busy it gets.

Tracking your business performance against a budget lets you know if the jobs you're taking on are profitable, if you need to trim your overheads, or if things are getting too big too soon. Bigger isn't always better and if you're not ready to expand it’s an easy way to lose control.

A cash flow plan helps you keep track of money coming in and money going out. You'll know if your jobs are profitable and your customers are paying on time, and if you can meet your wages bill, pay your BAS, and pay suppliers.

"For us, it's about having that information readily available so that we can keep an eye on expenditure on projects," says Dixon.

To get started check out our simple budget template here.

Set up a system

Planning is a start, but if it’s going to work you need to be organised, and that means setting up a few key systems, including:

Timesheets

For most tradies, their biggest cost is labour so keeping track is crucial for cost control. Getting your guys to fill out time sheets keeps them honest, and it means you always know what your wages bill is, and you can cost jobs properly.

“One of the things that has been more beneficial than anything else was developing a timesheet app says Dixon, “we saved twice as much as it cost to develop.”

As the boss, you've got a responsibility for the health and safety of your team and timesheets help you keep track of your guys if they're working remotely, or they're on site alone.

Too much overtime is a sure-fire way to blow your wages budget, so use timesheets to track how long jobs take and plan your workload around that.

"Sometimes we get to the end of the day, and we'll say let's just get some overtime on tonight and get this job done", says Dixon, "but you're not thinking about the bigger financial picture".

Quotes and Job Costing

Most tradies quote on jobs, but when you're just getting started, there's a risk you end up lowballing just to win the work. When margins are already tight, you can end up out of pocket once you've paid the team and your suppliers.

Using templates for quotes and job costing means you set a realistic price and include all costs. It's also the start of a paper trail you can use if the job looks like it's blowing out and you need the customer to pay for extra work.  A paper trail makes it faster and easier for you to do it next time. 

Payments and Paperwork

Paperwork is a pain, but business depends on it to get things done properly. Written quotes and costing jobs is the start, but if jobs are going to blow out make sure you get an agreement in writing before you do the extra work or variation. Never rely on a handshake.

Put in place processes for cash collection and build progress payments into contracts, and get them signed off. If you've done a budget and a cash flow plan, you'll know how much you need coming in every month to cover the bills.

Written processes are also a useful checklist for the team, and they’re a good way of recording what’s been done if any issues come up on a job long after you’ve moved on to the next site.

Get professional help … for the day to day and the big picture

When you write it all down, running a business can look like a lot of effort, and that's before you start work. But with professional help, it doesn't have to be.

Wilson Teis have been helping tradies run successful businesses for over 30 years, and we can help you with:

• Creating a budget, a cash flow plan and a job costing system that makes you money
• Meeting your compliance obligations including BAS, IAS and tax returns
• Preparing and reviewing monthly or quarterly reports on how your business is doing and highlighting any issues
• Day to day bookkeeping including payroll with WT Bookkeeping
• Planning for when you want to exit the business with WT Value

We also recently launched our small business mentoring service: Your Biz-Dev Program. It’s a chance for you to sit down every month and nut out issues with other small business owners. You’ll also get expert mentoring from Mike and Coral.

Find out more about Your Biz-Dev Program here or call Mike or Coral on 07 3255 1455, whether its ongoing support or just need help to get things up and running.

“Getting help worked for us”, says Dixon, “at the end of the day we’re still tradesmen”.