Not every trade business is built to go the distance.
It's a grim reality that can't be ignored if you want yours to stand apart from the rest. Thousands of trade professionals call it quits on owning and operating a business every year. Some cite a lack of work as the culprit, some say it's a failure to compete in a tight market, and others say it's the inability to break even on jobs.
But one issue underpins them all in some way or another, profitability.
This is the second in a series of six articles, written for the trade professional who wants to run a business that creates profit and continues to thrive where others fail. You'll learn everything you need to know about getting paid, from measuring your success and creating new opportunities to bringing in the ‘right’ customers and fine-tuning your cash flow.
Large-scale owners and operators, stick around! Our getting paid series isn't just for small trade businesses and their owners. Our guide on getting paid is a powerful resource for all trade professionals, whether you're going it alone or running a large team of technicians and office staff.
Each chapter will cover a different part of the 'getting paid' process, packed full of tips, advice and processes you can implement today.
Let’s continue the conversation around getting paid by taking a look at streamlining your job acquisition and invoicing.
In Chapter 1 we laid the groundwork for getting paid with benchmarking and KPIs, now it’s time to start bringing in more work so you can push that profitability margin sky high.
Job acquisition is a science, and there are a million factors that can determine how much work is available and how much of it will come your way. In your local market alone, anything from the density of competitors, the economy, consumer confidence, and even the weather can seriously impact how many job cards appear on the board throughout each week.
Don’t fret though! With a bit of innovation and a strong plan outlining how you intend to bring in the profitable jobs and reject the rest, you’ll quickly see your bottom line improve out of sight.
Let’s dive deeper into job acquisition by examining the three parties involved in creating profitable job opportunities for your trade business.
1. The Quote
Some would say the process of acquiring jobs is as easy as taking a call, offering a quote, and booking a client in if they accept it. But there’s so much more at work behind the scenes of a quote that can be improved to make the process even more efficient, and eventually, even more profitable. As to why you should focus your time and energy working on your quoting process, it’s quite simple.
Every job is different, but no matter what, they all start with a quote.
How you choose to quote is up to your professional discretion. Many trade businesses swear by fixed rate quoting, as the stability allows them to map out their profitability over longer periods of time. Others depend on a ‘Do & Charge’ method, where profitability can’t be charted over time as easily, but potential losses are limited if job and labour costs blow out.
Each method has its advantages and disadvantages, but what’s important is that you pick one that locks in your financial viability. If fixed rate quoting isn’t resulting in 100% of jobs being profitable, change that. If a do & charge model is costing you repeat customers because they hate being whacked with a big bill at the end of the work, shift off that model and try something new.
Savvy trade business owners can even start dabbling in the world of hybrid quoting models. These types of models have been creeping into the trade business sector for some time, but more recently they’ve been helped along by the increased need for variable rates on scarce materials and niche trade skills. In a small business with few employees, a quoting system where labour is charged at a fixed rate and materials are agreed on a do & charge rate can give you the benefits of both quoting models without the downsides. But this is just an example and there’s always room to develop a hybrid model that perfectly fits your business structure regardless of its size or employee count.
Whether or not you charge for quotes is another matter of hot contention amongst trade professionals. Some say that in a sea of free ‘no-obligation quotes’, you need to offer the same or risk losing out on work, but that’s only half the story. The quality of customers is something we’ll begin discussing a bit further into this article, before breaking down the ‘right’ customer in Chapter 3. But for the moment keep in mind that winning more work means separating the good clients from the bad instead of just accepting every job that comes your way.
The reason we bring this up is because quoting fees are a great way of testing the waters to see what type of client you’re dealing with. For example, if you charge a diagnostic or call-out fee and your customer rejects it solely because everyone else does it for free, then it isn’t worth pursuing the job any further. Customers who don’t care about your bottom line aren’t good for business and we can’t stress this enough. The fact of the matter is that customers like these don’t see the job they want done as an exchange between two parties; they see it as a haggling exercise.
To get paid more and more often, you need to use your quoting process as a way of weeding out the customers who either don’t care or don’t want you to make money. Always bear in mind that most of the time they aren’t doing it maliciously, they’re just looking out for number one. But that’s why it’s vital that you do the same in this regard and support your business profitability by cutting out the ‘possibly’ or ‘questionably’ profitable customers.
As to the process behind how you quote, a digital tool or platform stands head and shoulders above the traditional method of filling in a quote by hand and manually dispatching it via email. Many modern digital quoting packages speed up the process by allowing you to pull stored labour and material information directly into a quote, then dispatch it to a customer without having to drag a PDF into an email and go from there. It’s also worth mentioning that many accounting packages such as Xero, Reckon and MYOB include quoting packages as a standard part of their product offerings. These can be great for some trade businesses, but the depth and complexity of trade work quotes are often too much for these packages to handle, so a trade-specific quoting solution is highly recommended.
2. The Job
Every job is unique, and sometimes the needs of the job differ wildly from the needs of either you or your client.
In an ideal world you’d look at every job on paper and quickly decide whether it’s worth your time. But over the past few decades, that task has become steadily more difficult.
New technology serves as a great example of how additional complexity has crept into your average trade job. Clients want more tech in their homes or businesses than ever before, and what looks like a simple job can quickly become a nightmare if a client turns around and suddenly wants to add the latest gadgets on top of it. Pre-installed tech is also an issue in maintenance and upkeep work. How many times has a job seemed too straightforward to be real recently? You take the work, then look behind the wall and find out your access is blocked by dozens of unexplained cables from a smart home conversion the client got on the cheap 4 years ago and didn’t tell you about. This a very specific example, but it highlights how jobs can’t be so easily categorised when there’s so much that needs to be considered before you even accept and start completing the work.
How this relates to getting paid is in the need to approach each job just as you approached the customer during the quoting process. By this we mean you should always take your time and evaluate the pros and cons of each job instead of instantly agreeing because more work equals more money. Don’t get the wrong idea, you should always be prompt in replying to potential clients and accepting good quality work, just don’t let urgency win out over common sense.
Job timelining is another facet of getting paid that rarely gets a look in when discussing how to innovate on a business’s current operations and push it toward greater profitability. Once upon a time, the manual process of creating job cards and scheduling them on a whiteboard meant that once jobs were locked in for the week it was an absolute pain to change them. Now thanks to the wonders of digital scheduling, tradespeople can afford to be a lot more flexible in how they line up their jobs and fill in any extra time they have. Has one of your techs got a few extra hours free after a cancellation? Slot an outstanding job into their digital calendar, ping them with a notification while they’re still in the field and off they go. It’s little efficiencies like this that combine to make a big difference in how many jobs you get done each week, which directly contributes to how often you get paid and helps improve your bottom-line day after day.
Overall, though, the ability to remain flexible and pass up jobs you know aren’t going to contribute positively to your bottom line is a skill every tradesperson should have in their arsenal. It sounds counterproductive to be discussing passing up work in a chapter about winning more work, but it makes sense with the right context to back it up.
Spending too much time chasing jobs that are never going to result in a quote, let alone a decent payday, is a pointless task and will hinder your job acquisition process by creating an excess of dead-end quotes that drown out the quality ones. Think of this kind of work as a pitfall, not a job, and you’ll quickly see why getting more work is as much about quality as it is quantity.
3. The Client
Separating the bad clients from the good works well in concept but doing so while you’re in the field and focused something more important is where things can get difficult. You’re connected to the client through both the quote and the job itself, and we’ve outlined above what you need to be thinking about before you create one and accept the other.
Now it’s time to use what you’ve learned about both to assess each client and determine whether they’re going to positively contribute to your goal of getting paid more, or whether they’re just going to waste your time.
Here are a few types of ‘bad’ customers you should always be on the lookout for:
Know-it-all customers are some of the easiest to spot, and while they aren’t always going to cause you grief if you take their job, there’s always the chance that they’ll cause trouble down the track. The internet has enabled anyone to become a self-proclaimed trade expert, and you must assume that every customer has done a bit of research online before calling you out to a job. This can be helpful in finding out what they need from you quickly; but it also means your customer could be armed with misinformation before you even knock on the door. As a rule of thumb, if a customer tries to tell you how to do your job before you’ve even had a chance to quote on it, they aren’t going to let up when work commences. This isn’t always the case, but problems at the start indicate problems down the track. Nobody wants to be stuck chasing payment from a customer, only to be told by someone with zero trade experience that the work wasn’t done properly.
If you hear phrases like:
“That’s double what the other tradie I got a quote from told me”
“I’ll need to check if someone else can do it cheaper”
Or even an outright “Can you give me a discount?”
Then you’re dealing with a customer who couldn’t care less about the quality of your work or your great customer service. All they want to know is whether they can save a few bucks by reducing your profit margins.
We mentioned earlier in this chapter that quoting fees are a means of weeding out the bad customers and it’s this type of client you prevent from wasting your time by enforcing one.
Then there’s the ‘some time down the track’ customer. This is where you need to be a little more careful in diagnosing your time wasters. Some clients like to keep their cards close to their chest with respect to how soon they want to get a job going. During the quoting process if the potential client says they aren’t sure when they want to commence, ask them for a ballpark. If they won’t give you one, then there’s a strong chance that the amount of time you’ll spend chasing them up on the job will cost you more than not taking it. Keep these clients in a list somewhere and refer back to them if you’re ever short on work, but always be ready to cut them loose if they’re just kicking tires.
And, of course, there's the ‘left me on read’ customer. Customers who stall a job after the quoting process can be frustrating, but there are a couple of ways you can combat the issue. One way is to provide quotes that are only good for a certain amount of time. It could be 2 months, 6 months or a year, but what matters is that if that time elapses the client knows they’ll need you to quote again. This can push on-the-fence customers to lock in the job a lot quicker and it provides you an opportunity to make a bit of profit off the tire kickers if you charge quoting fees. Another method of dealing with stalled quotes is to feed your quote stallers into an automated re-engagement system. When a quote reaches a certain age, send the potential client an automated email that asks them whether they still want the work done. Automated mailing lists are easy to set up and relatively cheap, so we recommend that businesses of any size funnel their quote stallers into one to save time and effort on contacting them yourself.
Overall, the best thing about bad clients is they’re usually easy to spot, and the ones who aren’t can be managed with the right business process in place.
Now we’ve covered what a bad customer looks like, it’s time to discuss the perfect client and how to engage them exclusively. In Chapter 3 of our Getting Paid series, we’ll profile the ‘right’ customer. You know, the one who pays on time, never argues, and always offers you a cup of tea or coffee when you arrive on-site. They aren’t as rare as you might think, and you can click the banner below to find out where they’re hiding.