5 ways to invest for growth while controlling costs
The Holy Grail for ambitious tradespeople is to grow their business without too much cost or risk. This article looks at some of the best things to try first.
Make the most of your quotes
A survey was carried out on over 1,000 homeowners. 75% said that they were frustrated, trying to get quotes from trade companies. 11% were frustrated “to a large extent”.
Winning quotes is critical to growing any installer business. One of the easiest ways to do this is to respond quickly to requests for quotes. If you do, you will often win the business with relatively little competition. Some of the fastest growing trade businesses turn around their quotes within a day.
You shouldn’t worry about your availability as having too much work is a good problem. After a customer decides to go with you it’s then time to negotiate the start date. A lot of people will wait for their chosen option. This is especially true when you explain that you won’t compromise on quality or job length by starting before you can devote yourselves to the job.
Winning more work is not just about growth. When you have more work, you can turn down less profitable opportunities as well as gently increasing prices. With more work you can afford to lose a few quotes on price. All of this provides more funds for growth.
Do good work
One of the most straight forward ways for installers, plumbers and electricians to grow their business is to have happy customers. With 70% of residential business coming from word of mouth, this is the single best way to get low cost growth. Electrical contractor Mark Goodchild of electric-call.net puts it pithily: “We make sure the job is done properly so we don’t have to go back.”
Of course, there is more to this than just doing good work. We all make mistakes and there are also misunderstandings. The response has to be to do your best to satisfy customers, even when they are unreasonable. Typically, customers are more likely to tell their friends about bad experiences (in their eyes) as good.
Happy customers make the job more pleasant too.
Think about your marketing
Word of mouth is important, but years can elapse between major projects for a particular customer and their friends. That’s why helping them to remember your name is vital.
Many ways of doing this are cheap – certainly in comparison to Checkatrade, Rated People or My Builder. Here are some simple ideas:
* Have your business name, number and what you do on every van.
* Give a business card to every prospect and customer. You can get them for almost nothing online.
* Put up a board outside the premises where you do the job.
* Consider a company uniform, which has several benefits. These include looking smart and professional, reinforcing your name in your customers mind and being a walking advert, just as a van can be a moving advert!
Another not so obvious way of helping get your message across is specialisation. Again, Mark Goodchild of electric-call.net has this philosophy: “We don’t cover all types of electrical installation as it’s impossible to be good at everything". It is tempting to chase every opportunity, especially if you are keen to grow. But being particularly good in one or two areas makes sense.
Specialisation will make you more efficient at doing the work and also mean you should hold less parts. If you specialise and have your own web site, you are more likely to get a decent stream of leads from people searching.
Having your materials ready on site before the job starts saves time and money. It’s easy to waste an hour driving to the plumber’s merchant, finding the right stuff, paying at the till and driving back. Plus, you may pay full whack and not get any credit. This is bad for cash flow. The key to avoiding this is planning.
Computer systems based on smartphones, tablets and desktop computers cost money. But increasing numbers of installers are finding that this is a fraction of what you can save by from the resulting efficiency.
In the past installers, particularly the smaller ones, haven’t used systems because they didn’t like the idea, they weren’t mobile and the systems weren’t particularly designed for the trade. That’s now all changing with the new generation of smartphone and tablet-based systems. The field trade industry is less computerised than almost any other business area and that’s been for good reasons. Those reasons are now gone and installers have the chance to share in the benefits that other businesses have been enjoying for years.
A single business system can now manage everything. This includes staff schedules, team tracking, keeping details of customers and communicating with them, project management, raising gas safety documentation, generating quotes and invoices and more. The result is less time spent on paperwork, faster quoting, quicker invoicing and not having piles of paper everywhere.
Optimise your staff
Having great people is the biggest predictor of success in business. Without them, you can’t grow.
That’s why the first rule is to recruit good staff. When there is pressure to try and recruit quickly, it can be tempting to settle for mediocre people, or even worse.
That’s always a bad idea as having to dismiss people and then find replacements takes much more effort than getting it right in the first place. Bad staff upset customers and their work ends up with refunds and disputes. They are less productive. Even if they are cheap it’s a bad deal. They demotivate others as well, who tend to wonder why they bother when poor work is tolerated and they have to cover for it. They need constant watching and managing else they will create endless problems. Don’t recruit them in the first place.
Here are some tips to recruit the good ones:
* The more you see, the more likely you are to get the good ones. Don’t skimp on paying recruitment fees where necessary.
* Look at their job history record. Lots of short stays at jobs suggests problems. Previous pay rises and promotions suggest the opposite.
* Take up references and always try to call. Most referees try be as positive as they can, but the longer you talk, the more you get the unvarnished truth.
* If you can, bring people in for a day’s work so you can both see how well they fit in. There’s nothing like seeing their real work.
Once you have great staff on board, you want to keep them motivated. Here are some of the do’s and don’ts:
* Keep the lines of communication open. Explain details of jobs and your priorities, they aren’t mind readers. Ask for their opinion on everything happening in the business. The biggest complaints from staff are that nobody asked me and nobody told me.
* When someone has put in great performance, praise them in public. Great work warrants immediate praise.
* Always save any rebuke for a private meeting. Public humiliation will always prevent the person hearing what you want to say and is the most demotivating thing you can ever do. Other staff that initially wanted them pulled up can instead become embarrassed and sympathetic.
* Try to make any meeting to correct staff as soon after the problem arises as possible. Letting things slide is easier short term but much harder in the long run. Ensure that everything you say is as constructive as possible and ask questions. Never give them a hard time to get revenge or make yourself feel better.
* Never emphasise that “this is my business”. You want employees to behave as if it is their business too, not yours.
* Remember people will be motivated when they feel treated fairly and can take pride in their job. Following the advice on communicating with them is always a good start.
* Also remember that a high salary is not a motivator but a belief that they are underpaid is a huge demotivator. That’s why you have to watch the difference between salaries.
Sometimes we can make things too complicated in business and I expect that you will find some of the ideas here obvious! The problem is that getting around to doing the obvious can be a challenge. My hope is that this article is an encouragement to get on with it. Good luck!