Business coach Daniel Fitzpatrick looks at five tell-tale signs of bad systems in a tradie’s business
If you’re struggling to systemise, you’re not alone. At a certain size of business, the moving parts are harder to control and you run out of hours in the day. That’s when systems save your bacon.
Which of these tell-tale signs does your business have?
1. You’re overwhelmed with work
You’re busy working big hours to fit all the pieces together. Business has become all-consuming. Your family is missing out.
And if you’re being honest? Jobs are a bit out of control. They aren't well organised, when schedules change or staff are off sick, it's even worse.
We’ve all been there. But if this is happening to you month after month, it’s a red flag that you’re taking on too much work.
You’re likely misjudging your capacity – an easy trap for tradies to fall into.
Obviously, you know what projects are lined up, but until all jobs are visible in one place, you can’t truly get a handle on how much extra you can accommodate.
You need to rely on a good scheduling system and build in a buffer, so you can be flexible enough to adapt – only then can you get capacity right.
Do you have a hard time turning work down? A better filtering system can identify which work you do/don’t want. An improved line of questioning can help you to say no to customers, while still having them walk away happy.
To increase capacity, you’ll also need to hurdle the skills shortage with a hiring system that attracts quality staff, so you can take advantage of the current boom (instead of drowning in it!) and grow your business.
2. Your cashflow is hit or miss
It’s close to the 20th and a few people haven’t paid you. Now you need to pay suppliers and staff – but there's a cashflow gap.
So you scramble to get the money in. Who can you invoice now? Who can you chase? Who can you delay paying?
If you’re a husband/wife team, prepare for a late-night argument about who is to blame.
Or ring the bank and beg some guy who doesn’t understand your business to stump up the money to tide you over. It sucks.
It all comes down to not having robust enough cashflow systems.
If only you’d billed work out earlier, been in touch with late payers sooner, or structured progress payments to better suit your timing, then you’d have a better chance of avoiding this situation. These aren’t the whole answer, but they do stack the odds in your favour.
Make these changes and, ideally, next time the 20th rolls around, you’ll have better options. The trick is to make cashflow as predictable as possible and minimise surprises.
It’s having a nice cash buffer in the bank for rainy days. It’s seeing ahead, knowing what’s going to be in your account when – and how much is yours after all the bills are paid.
Work the system diligently and you’ll almost always have enough cash in the bank. So, if someone doesn’t pay on time, you’re okay.
3. Employees making costly mistakes
Imagine the scenario: a customer calls because there are problems with the job and they’re not happy. Re-dos cost time and money, and hurt your reputation.
You arrive on site and realise things are wrong. You have to pull up your team and commit more time to correct things. Even worse, you feel you can’t leave site – you need to be there to make sure it all goes smoothly from now on.
Staff are the backbone of your operations. It’s essential they’re getting things right. You need a solid team that listens, understands what needs to be done and delivers great work at a professional level.
If mistakes keep happening, it’s because there are not enough rules and systems onsite so everyone knows what’s expected.
Or, if you’ve got good systems and your team isn't using them, you’ve got an issue with buy-in.
It’s easier than you think to be the leader that gets everyone pulling the same way, motivated and taking responsibility for their part.
It all comes down to having good procedures, checklists and follow-ups, so things are done right and mistakes are stopped before they happen.
This enables you to deliver on your promises, delight clients and hit targets. Best of all, you can be away from site knowing jobs are in safe hands, or your foreman sorts it for you.
The bonus is, when you make it clear that you expect accountability, those one or two disruptive staff members will either step up or bow out. Creating a strong team culture also means improved productivity, less sick leave and your best staff won’t join a rival firm.
4. Losing money on jobs
Has your business sprung a profit leak? This might show up when you do a bit of costing on a few jobs and it seems like there are some holes there, or that last job took longer than you thought, so you know you didn’t make any money on it.
Basically, you’re doing a lot of work but there’s not much money in the bank account to show for it.
Keep in mind: bigger businesses have bigger holes. Larger jobs, more staff and multiple jobs all add costs and leak money much faster.
If you’re regularly losing money on jobs, let’s look at your financial systems. Start here:
A) Your pricing process.
You might be under-estimating the hours or basing your price off old supplier costs. Are you quoting what you think the market will pay or the margin your business actually needs?
Price right – in the sweet spot. Not so low that you don’t make good money and not so high that you price yourself out.
B) Your system for tracking and controlling costs on the job.
Losing margin? Projects always blowing out? Do you often find yourself doing work you feel you can’t charge for, so your margin takes the hit?
Let’s get your project management software working to its fullest. Maybe you’re not tracking target costs and hours to the level you should. A red flag is not finding out things have gone south until it’s too late to do anything about it.
Usually, profitability can be vastly improved with just a few tweaks.
I know we’ve got this right when tradies I coach are hitting the margins they want. They grin and say: “Dan there’s a lot more money in the bank now. Cashflow is way easier. I've adjusted my pricing and clients agree to pay for variations with no dramas.”
5. You’re buried in admin and can’t get the important stuff done
Despite your best intentions, urgent things come up and they can’t wait. Your week is derailed by quotes you must finish, things happen on site you have to deal with and your inbox is out of control.
Truth is: to progress the business and regain your sanity, you simply can’t be overly involved in the day-to-day running of it.
The answer is to implement a good system for how you spend your time.
You must decide which tasks are most important – both for the business to be successful and for you to be happy.
Schedule your priorities and work on the most important stuff first, such as tasks that give you the most ROI. Dedicate specific time blocks in your week for certain tasks, so the important stuff has its place.
Part of extracting yourself involves delegating repeatable tasks (and the simpler decisions) safely to your team. Having robust systems and checklists is the only way to hand off tasks and trust they’ll be done right. This way a lot of things can happen without your direct input.
This creates more time for you, for higher-level tasks, family time, rest and relaxation.
Stacking small wins to free yourself from working 'inside' your business creates a positive chain reaction, where, every week, things get a little more structured, a little easier and more profitable. Small tweaks will get you there.
You’ve built a great business. You just need to take the pressure off a bit with systems for your capacity, cashflow, team/onsite operations, pricing/margins, and time.
Need a bit of guidance in how to proceed? Grab a free chat with me here: www.nextleveltradie.co.nz/nextstep
Trades business coach Daniel Fitzpatrick has been helping tradies increase profits and win back their weekends since 2010.
Need some help to get your team performing at the highest level? Book a free strategy chat with Next Level Tradie director Daniel Fitzpatrick here: nextleveltradie.co.nz/nextstep