Top 10 business mistakes
If you feel you're not getting ahead and your hard work isn't being reflected money-wise, chances are you're making one or more of these mistakes, which even the smartest business owners do sometimes.
1: Being unaware of margins and losing money on too many jobs
Often I see tradies working really hard, but they’re just not as profitable as they should be. It’s frustrating because they are missing out on the real money. The problem is they just aren’t getting the margins right consistently on every job. This is even more of an issue when the business is growing – you can end up doing more jobs for less money.
2: Working too many hours at the expense of health and family
Business is a marathon, not a sprint. When business owners are working 50+ hours per week, they start making mistakes. They are reacting, instead of controlling their business. If this continues long term, they spend most of their time putting out fires, or even worse, their health or family falls apart.
3: Not knowing the numbers
Many tradies don’t know their numbers. They are busy, but are they making profits every single month? They just don’t know. This is dangerous. If things go wrong, it’s often too late to correct.
4: No structure or direction in the business
Lack of planning and systems is a huge problem and can happen in any size business, but especially if a business grows quickly. Important information including customers, jobs, and work standards are all in the owner’s head. This becomes frustrating for everyone; standards start to slip; jobs become slower and inefficient, and the owner works longer and longer hours just to keep things moving.
5: Relying on a small number of large customers
For some, the easy option is to rely on one or a few large customers for work. This is dangerous because before long they will start calling the shots - when you work, how much you make, etc. Also, if they have less work for you, or go broke, it will have a major impact on your business, sometimes irreparably. If your biggest client went broke (or stopped giving you work), would you survive?
6: Giving too much credit for too long
Credit can be dangerous and is one of the biggest downfalls for trades. Many have gone broke because their biggest clients didn’t pay them. Or at the very least have been stressed out with strangled cashflow at the end of the month looking for enough to pay staff, suppliers and the bank while waiting for overdue accounts to come in. How much have you lost in money and time through late payers and bad debts?
7: Not billing everything out on time or at all
Often, especially on complex jobs, bills are sent out weeks or months later. Some details are forgotten, so not everything is billed, or worse the job is not billed out at all.
8: Not dealing with leads and quotes effectively
A number of tradies get plenty of good leads but don’t follow them up early enough before they go cold. Or because they don’t qualify their enquiry by asking good questions, they waste a lot of time quoting jobs they were never going to get.
9: Spending too much time on the tools instead of growing the business
Too much time on the tools leaves no time to find more work or make the team more efficient. It is important to schedule time each week for marketing/selling and putting systems in place. Otherwise, you will restrict growth and profits.
10: Relying on a small number of lead sources
A deceptive but deadly mistake. You might have plenty of work in the short term, but if you rely on one source e.g. word of mouth, you’ll be stuck in a feast or famine work cycle. It’s hard to get ahead, because what is made during the good times is then lost again when it gets quiet.
If you see yourself making some of these mistakes, the good news is it’s easy to fix, if you put the right strategies in place. Many tradies I have worked with have been able to turn their businesses around by focusing on these solutions.
So start now by working on the one mistake causing you the biggest headache, then the next and the next. It won't be long before you start getting the business you want.
by Daniel Fitzpatrick
Next Level Tradie