- On 25/11/2019
Managing a trade business is hard work. Challenges come in many forms, whether it be insufficient funding or broken tools. However, the biggest issues you need to worry about are the ones you may create by accident. Below are six common mistakes you must avoid to ensure the success of your company.
Spreading yourself thin
Running a trade business forces you to wear many hats. On any given day, you could take on the responsibilities of a marketing director, hiring manager, or project coordinator. No matter how adept you are at running a business, you shouldn’t do everything yourself. Taking on too many responsibilities means you lose focus of vital tasks and new opportunities for growth.
To avoid these issues, you need additional staff who can make up for your shortcomings as a business owner. This requires you to assess your skills and recognise your knowledge gaps. If finance isn’t your strong suit, for instance, an accountant is essential for balancing the books and growing your business.
Accepting ill-fitting jobs
It can be tempting to accept every project to turn a profit, but it may end up costing you. In many cases, you’ll be forced to invest in new equipment and training to serve specific clients. That’s why it’s important to be selective and work with clients that match your core services.
For example, it doesn’t make sense to accept office renovation projects if your company specialises in bathroom and kitchen remodelling. By working with clients that fit your job description, you’re much more likely to deliver seamless, high-quality service. Specialising in specific services also allows you to establish a particular niche that lets you stand out from your competitors.
Blowing your budget on equipment
A big mistake trade businesses make is overspending on their equipment. Buying heavy machinery like excavators and bulldozers can increase costs, resulting in serious cash flow issues. It’s also difficult to get any value from heavy machinery if you only use it occasionally.
Hiring equipment for each job is a much more cost-effective option. For a fixed hourly rate, you get top-quality and fully insured equipment transported to your job site. If you need something more permanent, investing in high-quality secondhand equipment makes more sense. These cost almost half the price of new machinery, perform just as well, and are best suited for long-term projects.
What’s more, you can even claim deductions for tools like power drills and rugged laptops until June 30, 2020. According to the Australian Taxation Office (ATO), trade businesses can claim a deduction on assets that cost less than $30,000. Taking advantage of these incentives can prevent equipment expenses from getting out of control.
Overlooking social media
Social media is often dismissed as a time-consuming pastime, but it can be a powerful marketing tool.
The right social media platforms allow you to reach a wide audience and connect with potential customers. You can establish yourself as an expert in your field with useful content to build brand awareness. Plus, if you provide excellent service, customers may leave positive reviews that help you win more jobs in the long run.
Social media platforms also give you valuable insight into market trends. This is especially helpful for knowing what property owners are interested in so you can promote the right services.
Spending too much time on paperwork
Productivity suffers when you’re constantly bogged down by administrative tasks like invoicing and payroll. These tasks involve a lot of tedious data entry and approval procedures that eat up time you’d rather devote to higher priority jobs. What’s worse, if you’re doing all of this by hand, processing errors are inevitable.
Workflow automation streamlines routine tasks so you never have to concern yourself with repetitive, error-prone paperwork.
You can create a workflow that processes work requests and forwards them to the appropriate manager for approval. Another pre-programmed workflow creates work orders, tracks job-related expenses and billable hours, and generates customer invoices. You can even set automated alerts for tradies to follow up on unpaid invoices when a job is complete.
Failing to review finances
Having a limited understanding of your finances is akin to flying blind. If you don’t pay enough attention to costs, how will you know your business is running smoothly? Better question, how can you identify cash flow problems, let alone make informed strategic decisions? Financial monitoring is the answer, and it’s easier than ever with the right tools.
Tradie-optimised software like WorkBuddy gives you a good grasp of your company’s financial health. For starters, it has visual dashboards and reporting tools that track profits and losses in real time. You can then drill down into the data to see which part of your operations is falling behind.
WorkBuddy also comes with cash flow forecasting. This analyses financial data and estimates the amount of money that will come in and out of your business. It forecasts several months ahead, helping you anticipate financial obstacles and fine-tune your spending.
Mistakes happen, but having the right mindset and using feature-rich tools can put you one step closer to an error-free environment. WorkBuddy offers a wide array of features that make your trade more efficient and profitable. Call us today or request a free demo to learn more.