Who doesn’t want their business to be more profitable? When a new year approaches it is the best time to set financial goals. So if you want 2018 to be your year for profitability, you can follow these 5 ways to turn up the profit for your trade or construction business.
1: Remove The Red Tape
Rules, regulations and forecasting can be time-consuming. Not only are there employer obligations, wages to pay and taxes due, you also need to make sure there is the cash flow to cover it.
Wouldn’t it be great if you never had to worry about any of that red tape again? Grab yourself a good accountant and you won’t have to. They can help you manage your finances efficiently, advise on the best software to use and also on the best way to make certain business decisions. Let them handle the red tape so that you can focus on what you do best.
2: Cost Things Correctly
If you fail to cost a job correctly then you are losing money straight away. If you do not estimate the materials correctly, know how long it will take, or properly assess the work that needs to be completed then you can risk undercharging. What looked like a profitable job, to begin with, could actually end up costing you money.
Take the time to understand the client’s needs, the resources required and how long you will need for the job. It can even be a good idea to add a small buffer in case things run over. You can always make the final bill to the client less if you don’t use all of the materials or time.
3: Get Paid On Time
One of the hardest things to manage is when you will get paid. Often that ‘when’ is a big question mark. But you deserve to be paid on time and for the correct amount.
The first thing to do is to agree on the fee and the payment terms upfront with your client, then there will be no confusion when the invoice is due. Also, give them a number of easy ways to pay you. Have your accountant advise on how to set up mobile payment options so that you can collect the money while you are on the job. Also give people the option to pay by Paypal or credit card. You could also set up an instalment arrangement so that the client can ensure the full amount is paid by the due date.
4: Chase Your Debts
It is easy to let outstanding invoices get out of hand because it is time-consuming to get the funds in. Again you can rely on the expertise of your accountant to help you out.
Have a way to automatically notify your client when their bill is almost due, when it is due and when it is overdue. You can set up these invoice reminders through an online accounting system like Xero. You can also pick up the phone and call the client. Sometimes they will simply have forgotten and need a brief reminder.
If they truly are trying to dodge payment or do not have the funds available, then it is best to get onto them as quickly as possible. You may be able to agree on a payment arrangement to clear the debt.
5: Spend More Time Doing
The beginning of the year is a fantastic time to streamline your systems. Get all of this in place so that you can focus on doing what you do best during the year.
You also want to call in the experts. Delegate the job to a knowledgeable spouse, employ an administrative assistant, engage a VA, or speak with your bookkeeper. Remove the need for you to do the finances. That way you minimise the chance for errors, know that things will be done correctly and free up your own time to take on more jobs.