Business coach Daniel Fitzpatrick looks at the 5 tell-tale signs of bad systems in a tradie 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 being 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 you’re taking on too much work.
You’re likely mis-judging 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.
Rely on a good scheduling system. Build in a buffer so you can be flexible enough to adapt. Only then can you get capacity right.
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 and grow your business.
2. Your cashflow is hit or miss
It’s close to the 20th. 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.
And it’s all 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. These aren’t the whole answer but stack the odds in your favour.
Do cashflow right and next time the 20th rolls around you’ll have better options. The trick is to make cashflow as predictable as possible, minimise surprises.
It’s having a nice cash buffer in the bank for rainy days. It’s seeing ahead, knowing what’s gonna 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
A customer calls, there’s problems with the job, they’re not happy. Re-do’s cost you time and money and hurt your reputation.
You arrive onsite and realise things are wrong. You have to pull up your team, commit more time to correct things. Even worse you feel you can’t leave site, you need to be there to make sure all goes smoothly from now on.
Staff are the backbone of your operations. It’s essential they are getting things right. You need a solid team that listens, understands what needs to be done, 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 aren’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 up. So things are done right and mistakes are stopped before they happen.
This enables you to deliver on your promises, delight clients, hit targets. Best of all your time is free. You can be away from site knowing jobs are in safe hands. Or your foreman sorts it for you.
Bonus is, when you make it clear you expect accountability, those 1 or 2 disruptive staff members? They’ll either step up or bow out. Creating a strong team culture also means improved productivity, less sick leave, and your best staff won’t leave.
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’s 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, 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 too low you don’t make good money. Not too high 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. 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 have to finish, things happen on site you have to deal with, your inbox is outta control…
Truth is: To progress the business and regain your sanity, you simply can’t be overly involved in the day-to-day runnings.
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. 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 more simple 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. For 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.
You’ve built a great business. You just need to systemise 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