5 ways your construction or trade business can be more profitable in 2018
Campbell King is a co-founder and Partner of mi-fi, which offers tax, accounting, business advisory and financial planning services for entrepreneurs and professionals.
It’s that time of year again. Everyone’s rushing to get everything sorted before things slow down over Christmas and the New Year – but you also want a well-deserved break with the family, at the beach, or around the barbecue. It’s one of the most stressful times of year for everyone, especially for construction and trade businesses.
It’s also a chance to take stock, and decide where you want your business to go in 2018. All the construction and trades businesses we’ve talked to have said that their number one priority is to be more profitable in the New Year. We’re construction and trades specialists who have helped hundreds of businesses from making a profit for the first time to tripling their annual revenue, so we’ve mapped out exactly how to do it.
Cut the red tape
Tradies all say that dealing with red tape is one of the toughest, most time-consuming parts of the job. As well as keeping on the right side of regulation and sorting out payroll, the taxman needs his cut, and it’s never a good time to be caught short.
What if you never had to be again? What if you could tell exactly where you were at, all the time, with all your jobs, and tax filing was a breeze? That’s what a good accountant is for. We can help you pick the right job management software, and online accounting software helps keep your data safer than it’d ever be in a spreadsheet. Think of us as your personal red-tape cutter – or, when cutting isn’t possible, we can untangle things, or just keep you from getting tied up.
Cost the job right
One of the things we see most often with tradies is that they undercharge for jobs. A big job with lots of dollars attached to it might look profitable, but it often turns out the job is breaking even or actually costing money. We can help with this. We use our expertise, online accounting software like Xero, and job-costing apps, to make sure you get your job costing right – so you know exactly much money your jobs are making you. It means you can avoid work that would dig you into a hole, and pick winners right from the start. It’s a top tip for improving profits in the New Year, and we can help you get there.
Get paid sooner
The construction and trades industry types we talk to say that getting paid properly is a huge business challenge. It doesn’t have to be this way. Whether you’re a subcontractor on a big job site, or a sole trader doing residential one-off jobs, you should be getting paid regularly and on time.
We’ve got just the tools to help you get there. Tools like Xero allow you to send all your invoices with the touch of a button, and to know at any time what’s due, what’s paid and what’s not. You can even connect up EFTPOS or online payment services like PayPal or Pin Payments to make sure that residential customers can pay on the spot. Xero also works with all kinds of apps and software especially designed for construction and tradespeople that can make invoicing and payment a lot easier.
Chase bad debts without the effort
Many construction and tradespeople struggle with following up unpaid invoices or bad debt. It’s not something anyone wants to be doing when they could be out on the job. Fortunately, there’s an easy way to automate the pain away. Xero will send late payment reminders automatically and there are apps and tools out there that work right into the accounting software to allow you to chase bad debt without paying a mint or lifting a finger. We see clients all the time who we’ve helped improve the bottom line by making sure that their customers pay their bills. It could make a huge improvement to your business, and really lift profitability.
Spend less time doing the books and more doing what you want to do
In many trades and construction businesses, especially smaller ones, all the work is done by just one or two people. A lot of the time, we see wives and partners helping out with the bookkeeping, juggling spreadsheets, or filling out tax forms – or the tradesperson doing it all themselves out of hours. It can take a long time and it’s prone to mistakes.
Taking the accounting load off you is one of the easiest and most rewarding fixes we can offer – you get your time back, and so do your partners. What you do with that time is up to you. Spend more time on the tools, or hit the beach. Holidays are about family, and we’d like to help you spend more time with yours.
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Source: Xero Blog