This year’s sky-high inflation is hitting trades businesses hard. From the cost of suppliers and petrol to fewer customers and more job cancellations, it’s a tough time. New research from Small Business Loans Australia shows that 72 per cent of small businesses are struggling with supplier costs, petrol, and labour expenses. (1)
With economic uncertainty looming, it’s the ideal time for businesses to review processes, efficiencies, cash flow, productivity, and profit margins. Making small, incremental improvements across these areas can help sustain your business to grow, according to the leading job management platform, Fergus.
Dan Pollard, founder, Fergus, said, “A tough business can weather this cost-of-living crisis and come out stronger. The right tools and strategies can make you more profitable and ready for growth. For tradies, especially, understanding your cash flow is key to making money.”
How to stay afloat during the current cost-of-living crisis:
Make money management a top priority
Money management is the backbone of a successful business. Dan knows this firsthand after building his small plumbing business up, only to lose it all due to financial difficulties. However, learning from his mistakes Dan created the software company, Fergus. Now, he’s focused on helping other small businesses grow. His secret? Clear processes and tools that give you total control over your finances.
Prioritise immediate invoicing
The faster you invoice, the quicker you get paid. Don’t give clients a reason to delay payment by being slow yourself. Using invoicing software can speed things up and even offers electronic payment options, which can further accelerate payment cycles.
Aim to get a 50 per cent deposit on large jobs to cover materials costs. Then, structure your payment terms so that the rest is due upon job completion. The faster you complete quality work, the happier your customers and the quicker you get paid.
Keep tabs on outstanding invoices
Don’t send an invoice and forget it. Keep an eye on what’s owed and when it’s due. Managing your cash flow means knowing what’s coming in and what’s going out, and making sure you’re in the green. Use dashboards for a quick view of your financial health.
Dan Pollard said, “Just because someone owes you money, it doesn’t mean it’s in the bank. I’ve seen businesses look rich on paper but struggle because they didn’t keep track of unpaid invoices.”
Be ruthless with expenses
Keep a tight grip on your expenses. Know what you’re spending money on and why. One way to do this is through supplier integrations, like the one Fergus offers. This feature automatically updates you with the latest price books from your suppliers. With prices on the rise, this is a lifesaver for keeping your margins healthy without having to manually update everything. Your team can also offer cost-cutting ideas since they’re the ones out in the field. There are plenty of ways to boost profit margins without cutting corners on quality.
Focus on time management
Dan Pollard said, “Time is money, especially when growing your business. Many tradies get caught up working in the business and forget to work on the business.”
Better time management is the solution. Know where your time goes so you can plan for growth and focus on the financial and customer data your business collects. Focus on what’s profitable and what isn’t.
Dan Pollard said, “We know that there are still tough times ahead. If you can lay the foundations for a cash positive, efficient business, you’ll be well positioned for growth when the economy turns.”