Starting a business is not terribly hard but neither is it really straight-forward. This article looks at the main issues you need to think about...
How to take your trade business to the next level
Starting a trade business is hard. Not only do you have to be able to do the work personally, but you must run the ...
Starting a trade business is hard. Not only do you have to be able to do the work personally, but you must run the business too. Growing from that point is even more challenging.
Benjamin Dyer of Powered Now looks at what it takes to grow your business once you have successfully got started.
Not everyone who is in business is ambitious although frankly if you are reading this you are likely to be someone who wants to do better. The problem is that a lot of online advice is written by office-based marketing experts who don’t have the experience of street-fighting that running a small business involves.
So this piece is written to address the challenges of small trade businesses who want to grow, although hopefully a lot of the thoughts also apply to smaller businesses in other fields.
Sort out the basics first
The quality of the job you do is the single most important thing in running your trade business. You will not grow if you don’t do a good job. This isn’t just because you won’t get any word-of-mouth business, which is the best and cheapest source of leads. It’s also because you will end up in disputes with customers, bad debts and maybe even a battle or two with trading standards.
From our research with over 1,000 home owners, we know that word of mouth is by far the single biggest source of leads.
It’s also important to be realistic about your own strengths and weaknesses. If you run the business you are the biggest factor in its likelihood of success. Maybe get friends to tell you honestly what you do well and where you may be able to improve?
The other question to ask is what your company stands for. Maybe you will specialise in swimming pool systems? If you are an electrician, you may wish to become the best at doing automatic gates. You may be the most willing to answer call-outs at any time of day and night. We can’t be good at everything and focus makes you much more likely to succeed.
The twin challenges of sales and delivery
Word of mouth will grow your business, but slowly. So if you are ambitious, you need to market yourself. One of the problems with this is that it will cost money, so you have to make sure that your business is making decent money first.
Assuming you can grow your business, you need in tandem to grow your capacity to deliver. There’s nothing more frustrating than having generated great leads, finding that you can’t then fulfil them and the money is wasted.
Finding new business
In the desire to find more business, the first priority must be to treat every lead as a pot of gold. I have found it personally amazing how hard it is to get quotes out of trade businesses in a decent timeframe. So the first thing is to ensure that you turn quotes around fast. The software from my company can help here, but there are other similar solutions around too.
Don’t charge too little, generate enough leads so you can avoid any brutal price competition. If you don’t lose some deals you probably aren’t charging enough.
We have done quite a lot of research on Rated People, My Builder and Checkatrade that all focus on generating leads for trade businesses. Each of them has both detractors and companies that have found them effective. So each requires investigation, thought and patience to make them work.
Staff – the most difficult step
Getting your first employee is the biggest single step in growing your business. One way to ease your way into this is to use one or more sub-contractors until the business grows enough to justify a permanent hire. Just remember that using sub-contractors means complying with HMRC’s Construction Industry Scheme (CIS) and hiring permanent staff means operating PAYE.
The faster you want to grow your business, the more working capital you will need. It is heart breaking if your company goes bust simply because it grew too fast and ran out of working capital. When you are small you may be able to fund this gap from credit cards and loans from your family. The next most likely source is a bank overdraft which comes easiest if you have a track record. Always remember that debt significantly increases risk too.
It’s easy to talk about how to be successful in business, but we all know that it’s much harder in practice. Knowing your strengths and weaknesses, being clear on what your company stands for, keeping quality high and balancing ambition versus risk are all keys. Good luck with your efforts.