Are you making enough?

Many tradies already know that they are not making enough from their business but the question is what to do about it.

Often different types of jobs can produce very different profitability levels and by measuring the amount you make from the various types of job, it becomes much easier to identify where the profit leaks are occurring.

Ideally you should have a simple system to automatically back cost every job, but even as a short term survey of a cross section of work it is a worthwhile exercise.

Recently we undertook such a survey on a business and made a startling discovery – the largest client of the business was getting his work done for less than cost.  By negotiating some special terms based on large volumes, the client was quietly sending one of his key suppliers (my buddy) broke. As business in general had changed and volumes became smaller but more frequent, the special rates which had seemed OK at the time they were established turned into a millstone around my friend’s neck which was dragging him down deep into debt.

All was not lost however – a frank discussion led to a win-win negotiation which left both parties happy with the outcome.

The secret is to focus on what you want instead of what you don’t want.  The greater clarity you have about what you want, the greater your chance of achieving it.  The more you think about the things you don’t want the more you will get. It’s just like riding a bike – if you look at the rock in the road you will hit the rock – look for the clear way past the rock and that is where you will go…

 

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