Running a successful trade business isn’t just about hard work on-site, it’s about managing the numbers behind the scenes. Whether you’re an electrician, plumber, or any other skilled trade professional, maximising profitability requires strategy, planning, and the right tools. Here’s your game plan to ensure your financial year ends on a high note.
1. Review Last Year’s Performance
The first step to improving profitability is understanding where you currently stand. Reflect on the previous financial year to identify what went well and what didn’t. Ask yourself:
• Which projects were the most profitable?
• Were there any unexpected costs?
• Did you experience any cash flow problems?
This analysis will give you a clear picture of your business’s strengths and weaknesses. It’s also a great time to reassess your goals for the year ahead. Are you looking to grow your customer base, increase margins, or expand your services?
2. Know Your Numbers
Profitability hinges on understanding your numbers. Start by calculating your break-even point—the minimum revenue needed to cover costs. From there, work out your target profit margin. To ensure you’re not undercharging, factor in:
• Labour costs (including your own time).
• Materials and supplier costs.
• Overheads like fuel, tools, and insurance.
A common pitfall is underestimating indirect costs, which can erode profits if not properly accounted for.
Fergus job management software has Pricebook integration, which means you can accurately price up all materials, before adjusting your profit margin percentages to ensure every job is profitable.
3. Optimise Your Pricing Strategy
Are you charging what you’re worth? Many trade businesses fall into the trap of competing on price alone, but this approach can quickly eat into profits. Instead, focus on delivering value and adjust your rates to reflect the quality of your work.
If you’re nervous about raising prices, consider:
• Adding a tiered pricing structure for different service levels.
• Communicating the benefits of your expertise and reliability.
• Offering bundled services to increase the value of each job.
4. Streamline Your Operations
Efficiency is a key driver of profitability. Identify areas where time or resources are being wasted and implement changes to streamline operations. For example:
• Use scheduling software to minimise downtime between jobs.
• Standardise processes to reduce errors and improve consistency.
• Train your team to complete tasks more efficiently.
Time saved is money earned, so look for every opportunity to improve workflow.
Fergus’ scheduling and job tracking features ensure you’re always running at peak efficiency. With everything in one place, you can reduce admin time and focus on what matters most.
5. Stay on Top of Cash Flow
Cash flow is the lifeblood of any business. Even if you’re turning a profit on paper, poor cash flow can bring your business to a standstill. Here’s how to stay in control:
• Invoice promptly and follow up on late payments.
• Offer multiple payment options to make it easier for clients to pay.
• Maintain a cash reserve to cover unexpected expenses.
A proactive approach to cash flow management will keep your business running smoothly and prevent financial stress.
6. Build Strong Supplier Relationships
Your suppliers play a big role in your profitability. Build strong relationships with them to negotiate better deals, access discounts, and ensure timely deliveries. Regularly review your supplier contracts to ensure you’re still getting value for money.
7. Invest in Technology
In today’s fast-paced world, manual processes can hold your business back. Investing in the right technology not only saves time but also helps you make smarter financial decisions. For example:
• Use accounting software to track income and expenses.
• Implement job management tools to monitor profitability in real time.
• Leverage digital marketing to attract new clients.
Fergus provides live financial reporting, giving you a clear view of your business’s performance. This visibility allows you to make informed decisions and spot issues before they become problems.
8. Upskill Yourself and Your Team
Continual learning is essential for staying competitive and profitable.
Invest in training for yourself and your team to improve skills, increase efficiency, and expand your service offerings. Upskilling not only boosts productivity but also allows you to charge higher rates for specialised services.
9. Focus on Customer Retention
Acquiring new customers is important, but retaining existing ones is often more profitable. Build long-term relationships by:
• Delivering exceptional service.
• Following up after a job to ensure customer satisfaction.
• Offering loyalty discounts or referral incentives.
Satisfied customers are more likely to recommend your business and provide repeat work.
10. Regularly Review and Adjust Your Plan
Business conditions change, so it’s essential to review your profitability plan regularly. Set aside time each quarter to assess your progress and make adjustments as needed. This proactive approach ensures you stay on track to achieve your goals.
Ready to Start Maximising Profitability?
Managing a trade business involves juggling multiple moving parts, from job costing and scheduling to invoicing and reporting. Fergus simplifies these processes, giving you more time to focus on growing your business.
With tools like live financial reporting, accurate job costing, and streamlined workflows, Fergus empowers you to:
• Understand your true costs and profitability.
• Make informed decisions based on real-time data.
• Reduce admin time and improve efficiency.
Whether you’re a sole trader or running a larger operation, Fergus scales to meet your needs. Start the new financial year with the confidence that your business is set up for success.
By implementing these strategies and leveraging the right tools, you can maximise profitability and build a thriving trade business. Now’s the time to take control and make this your most successful financial year yet.
