I enjoy working with tradies and their businesses. Maybe it’s their can do attitude, the way they put together creative solutions or maybe because Dad was an electronics technician and I wonder where I would be if I had followed a similar path.
As any good tradie will know, having the right tools for the job will make things go a whole lot smoother. Here are some tools us accountants think of when working with trades to help make their business perform and profitable.
Job Tracking – Keeping track of your work is important, making sure you deliver a great service, meet client expectations, where all your jobs are at and who is going to get them finished. With the rise of cloud systems there are a number of options out there that allow you and your team to be on the same page as to who is doing what by when.
Back costing – So as business advisors we really like this one and it takes a bit of work to get the system right but knowing how each of your jobs is contribution to your profit is a critical part of running a business. Knowing which jobs went well and most importantly which ones didn’t go so great. What were the key learning experiences from the not so good jobs so you don’t repeat the same next time.
Quoting and pricing – Get the pricing too high and you wont win the work, price too low and you may not make any money. Feed back from back costing, number or wins/losses and charge out rate calculators help find the right point in the market. The market is constantly moving so be prepared to change and review your pricing model frequently.
Charge out rate calculators – Knowing what each hour of labour is costing you is another KPI. A combination of available hours, pay rates and overheads tally to end up with a real cost per hour worked. As pay rates and overheads shift you should rework your calculations and consider the effect on your charge out rates when quoting or billing work.
Regular reporting – getting a once a year report from your accountant is about as useful as a flat battery pack. With systems like Xero and it’s various job tracking/costing add-on’s you can get good monthly figures in close to real time. Combine this with regular catch up’s with your business advisor and your onto a winner.
Greg Verhoef – Chartered Accountant
021 242 8690