5 tips for installers to reduce stress when running a business
There are lots of reasons for starting a businesses and it can be a lot of fun. Unfortunately, that often comes with some stress too. This article looks at ways of keeping things under control and reducing the stress in running your installation business.
Tip 1: Keep your cash under control
Being short of cash and struggling to pay bills is one of the top causes of stress.
The solution is to know what’s happening with your cash well before you reach crisis point. There are several ways that can help and here is a selection of ideas:
•Put money aside all through the year for your tax bill. One installer I know puts 20% of all his sales into a separate bank account. That way the tax demand doesn’t catch him short.
•Always invoice everything the same day you finish, however small. Then politely chase anything overdue as soon as that arises.
•Buy as much as you can on account so you can pay later. This point is also helped by good planning which we look at later.
•Have a cash flow forecast even if it’s just plotting cash in the bank on a simple graph every week. That way you can see trends. If you’re VAT registered, subtract the outstanding VAT due from the cash in the bank so you only show what’s “yours”. As your business gets bigger, get your accountant to help.
•Assume that bigger customers, particularly contractors, local authorities etc. will pay late. Charge them more and expect the worst.
Tip 2: Distinguish between the urgent and the important
In business, there are always two pressures. There are important things and there are urgent things. The urgent press in all the time. For instance, the customer is chasing you even though you had explained you couldn’t start for two weeks. Then there are important things that don’t have any immediate consequences if left, but will eventually be a real problem. Like recruitment and training.
The dilemma between the urgent and the important can be explained as choosing between “fighting the crocodiles or draining the swamp”. Another example is dealing with an emergency gas leak. It must be dealt with straight away. In contrast, recruiting apprentices might create a lot more work in the short run, but might be transformational in the long run.
When you run a business, you need to balance these two.
One way to deal with this is to always attend to the most urgent. But at the same time, make a note of your top three important issues. Target some hours every week to progress them. Don’t aim too high. If you keep plugging away you will transform your business over time. Progressing things steadily this way while still handling the nasty things that always pop up should help to keep down and see steady improvements.
Tip 3: Plan
Planning well is a classic way of reducing stress. You may be know the saying “PPPP” or the five P’s. That’s “Planning prevents piss poor performance”.
There is nothing that creates stress more quickly than being disorganised. I know that it can feel that time spent planning isn’t really doing the job and things would go better if you just got on with it. But that just isn’t true. Having the right materials and people on hand when they are needed is absolutely part of doing the job and the time spent planning pays off in spades.
It’s incredibly frustrating and stressful when you are standing around (or making an emergency visit to the plumber’s merchant) for key materials. Then you find that the boiler can’t be delivered until a day or two after it’s needed. Finally, you discover that your key staff are on holiday on the vital day that you need them.
Planning heads all this off. If you hate planning, try and work with someone who has the skills and loves to do it. We should all play to our strengths and that will mean a lot less stress.
Tip 4: Replace your paperwork with a system
This tip is a shameless plug for products from my company and that’s a fact! This doesn’t however make it any less true. And of course my company Powered Now isn’t the only one selling paperwork replacement systems.
However, it still never ceases to amaze me the comments that I sometimes hear on this subject. One recent one was: ”if you’re not interested in paperwork I'd imagine the app would become the same pain.” If that’s true, it makes the thousands of people using our system totally stupid not to mention all the people using other systems. There is an understanding that investing in tools and training should improve productivity and it’s the same with systems.
Today, anyone running an installer business has a mobile phone. But that wasn’t always the case. At one time there were plenty of people saying that mobiles were silly toys and it took a few years for this perception to disappear. In the same way it will be some time before everyone is using smartphones for their notes, invoices and time booking. In a few year’s time, even the smallest installation businesses will be using computer software to run things.
Everyone hates paperwork. Paperwork may well be the single biggest point of stress for people running installation businesses, so a good system has the biggest potential for reducing stress. The only issue is that it takes an investment in effort, time and money to get a new system going. As they say, if you don’t speculate you won’t accumulate.
Tip 5: Set customer’s expectations correctly and align them with reality
One of the biggest issues that arise in business comes from when you and your customers have differing expectations and one of the worst causes of this tends to arise when a job is badly priced.
Being on the job and knowing that you are losing money is really hard to take. Customers can be sympathetic. But most won’t be happy if you try to change the price when the job hasn’t changed.
You may think that all customers care about is price, but for most of them this isn’t true. Look at their car, have they bought the cheapest possible car that they could? For most people, that’s a no.
That’s why you need to charge the right price for the job. You need to properly estimate and you need to set your customer’s expectations of the sort of ball park price they will pay, before you even give them their quote. Under-estimating causes huge stress and is also one of the most common causes of business failure.
Of course, it’s a challenge to get your estimating right but like most things you can improve with practise. The way to do this is to review each job after its finished and then compare your estimate to the actual cost, including time, materials, everything. Rules of thumb can help a lot for the future, so you should take your experience of the size of house, number of bedrooms, number of radiators, etc. and look at what it cost. Create a simple rule of thumb that would have given you the correct answer. Then use that on similar jobs in the future.
Don’t forget that richer customers in the biggest houses probably want everything done to the highest standard e.g. all pipes chased in. That will cost a lot more than a simple, quick and cheap job. Take everything major into account.
Remember to always include a clause in your quote that covers unexpected things that come to light after the job has started. It’s not reasonable for you to take the risk for such problems. Gas Engineer John McLouglin advises: “On my quotes I always say ‘Subject to no significant discoveries that could not have been reasonably anticipated’”.
Get your stress down
Running your own business can be immensely rewarding, both financially and from a job satisfaction point of view. The problem is, it can come with a lot of stress too. We can all fancy a life without stress, but choosing to run your own business pretty much guarantees that can’t happen. However, that doesn’t mean that some of the causes of stress can’t be addressed and I hope that some of the ideas in this article will be a help.