According to market research company Statista1, the construction industry in the United Kingdom is forecast to increase in 2024 to £404.13bn rising to a revenue of £476.6 bn in 2027. But with the industry seemingly in good shape, why are so many smaller trade businesses stalling or facing a hard time? Fergus founder Dan Pollard, a tradesperson who has experienced the highs and lows of being a trade business owner, believes he knows the answer.
“One of the many hard lessons I’ve learned over my years in the trade industry is that sometimes, or many times, it is better to say ‘No,’ to a job, rather than ‘yes’,” explains Dan. “For many years, I said ‘Yes’ to every single job that came across my plate. If we had the manpower and we could fit it in, I said ‘yes’. The truth was, despite being crazy busy, we struggled year after year with cash flow.”
Boosting your trade business in 2024 could be simpler than many tradespeople think, thanks to a little help from job management software. By automating processes that normally take hours using paper, you can bypass all the mistakes Dan made. On top of that, Fergus is offering four new year resolutions which will get your business into shape and give it a boost:
1. Ask: is this job going to pay?
One of the biggest issues for the trade is unpaid debts, from businesses that go under or just won’t pay. Many just assume it’s part of running a trades business. It shouldn’t be and you should really ask, “can I figure out in advance if a job is going to pay or not, and can I avoid taking those jobs on?”
A bit of digging under the bonnet of your business will show you what’s paying and what’s not. Job management software can do this in seconds. With software that shows you profit levels on every job, like Fergus, this is easier than guess work or old-fashioned paper receipts.
2. Get a handle on costs
Monitoring expenses, creating invoices on time and ensuring payment leads to good cash flow and precise financial records. Keeping a close eye on supplies is another must – over ordering means over spending, under ordering means a job might not reach completion and you won’t get paid. It sounds obvious, but in a hectic business day it’s not always easy to stay on top of all this. Job management software can quickly create accurate invoices for clients, send out automated payment reminders and oversee stock levels so you can spot where resources are being over or under used, helping you stay in tight control of costs.
3. Figure out your high-margin, low-cost jobs
The first step to a big business boost is to figure out where you are already making money. Work through your financials, or even better let software like Fergus show you quickly and easily which jobs pay the best.
Dan figured out that emergency maintenance work such as burst water mains, blocked drains, hot water cylinder repairs and the like were his best money earners. He was making the highest margin on labour and materials on these jobs. And unlike new build construction work that sometimes stretched on for weeks, one person could get through a typical maintenance job in a day or even a couple of hours.
The high margin, fast turnover and low-cost model worked for Dan, but that doesn’t mean it’s the answer for you. One of your priorities heading into the new year should be to sit down and figure out where your business is performing well, and where it is not.
4. Say No to the bad jobs and Yes! to cash flow
Once you have identified and started to say ‘No’ to poorly paying jobs, start to say ‘Yes’ to the ones that do. Then get forecasting your cash flow which involves estimating your future sales and expenses. Forecasting your cashflow can help to recession-proof your business because it will tell you if you’ll have enough money to run your business or expand it in the next 12 months.
Cashflow forecasting manually, without help from job management software, often leaves businesses encountering shortcomings as they don’t have sufficient data to properly predict rapid changes. Again, let the software help. Once you’ve got a good financial report in front of you, the next step is to put some time into figuring out whether you need to say ‘No’ to more jobs or whether you need to up margins and markups to stay flush.
For more free information and advice on running a successful trade business, as well as a free trial, click here
