Hugh Bowman

Break Even Or Cash Break Even

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Understanding Break Even and Cash Break Even in a Tradie Business:

Knowing your break-even point is a crucial aspect of running a successful tradie business. It helps you determine the minimum level of sales needed to cover all your costs and expenses. Additionally, understanding CASH break-even goes a step further by considering financial obligations like loan repayments and taxes. Let’s delve into the concepts of break even and cash break even and how you can calculate them for your business.

Break Even Point:

The break-even point is the level of sales at which your total revenue equals your total costs, resulting in zero profit. In other words, you’re covering all your expenses, but you’re not making any profit either. This information is essential because it acts as a safety net, allowing you to sleep easy during periods of declining sales. Knowing your break-even point helps you set realistic sales targets and understand how much revenue you need to generate to meet your financial obligations.

To calculate the break-even point for your business, follow these steps:

1. Analyse Past Data: Look at your financial records from the past six or twelve months and determine the ratio of cost of sales to sales during that period by dividing the total cost of sales by sales:

Cost of Sales Ratio = COS/Sales

2. Look at the past 6 or 12 months of expenses and calculate the average monthly expenses.

3. Calculate Break Even:  The break even is the amount of sales for which we make zero profit.  I have found the easiest way to do this is by choosing different amount of sales until we get close to the close no profit using this equation.

Sales
Less COS
Less Expenses
= $0 profit

We already have the average monthly expenses from above, and the Cost of Sales can be estimated using the COS ratio by using this equation:

COS = Sales x COS ratio

So the equation becomes:

Sales
Less (Sales x COS ratio)
Less Expenses
= $0 profit

Lets put some numbers in to illustrate its use:

Presume we have calculated our COS ratio is 50%, and our expenses run at $25,000/month.  Now I am going to choose different amounts of Sales.  To start with I am going to choose sales of $60,000.  The equation looks like this:

Sales                            $60,000
Les COS                       60,000 x 50%
Less expenses             $25,000
Equals Profit                $5,000

Since there is profit, we need to choose a lower sales amount.  This time choose Sales of $50,000.

Sales                            $50,000
Les COS                       50,000 x 50%
Less expenses             $25,000
Equals Profit                $0

Since there is no profit, break even Sales is $50,000.

2. Calculate Break Even: Divide your total operating expenses by the ratio of cost of sales to sales to find the break-even sales amount.

3. Set Sales Targets: Use the break-even sales amount to set realistic sales targets for your business. Ensuring you achieve at least this level of sales will cover all your costs.

Cash Break Even:

Cash break even takes the concept of break even a step further by considering not only the business’s operational costs but also any financial obligations like loan repayments, taxes, and other cash outflows. This is vital because some expenses, such as loan repayments, might not be included in the traditional profit and loss statement (P&L), affecting your cash flow.

To calculate the cash break-even point, follow these steps:

  1. Determine Additional Obligations: Identify all the financial obligations, such as loan repayments and taxes, that are not reflected in your P&L statement. If you pay yourself by drawings, you will need to add this is too.
  2. Choose an increased Sales amount and rerun the equation so that the resultant profit covers the total of your other obligations.

Understanding both the break-even point and the cash break-even point is crucial for the financial health and sustainability of your tradie business. By knowing these figures, you can set appropriate sales targets and take proactive measures to ensure your business remains profitable and your cash flow remains healthy.

So, take the time to assess your business’s financial data and determine your break-even and cash break-even points to make informed and strategic decisions for your tradie business’s success.

I’ve created an handy excel spread that will help you calculate your cash break even.

Get A Free Copy Of My Break Even Spreadsheet

Fill in your details below to download a free copy of my break even spreadsheet that you can use immediately in your business.

 

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Exceptional Service and Delivery For Tradies

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The Crucial Elements of Exceptional Service and Delivery in Your Business

In the second volume of my book, “The Wealthy Tradie,” I delve into what I call the fourth pillar: service and delivery. This aspect is so pivotal that it can determine whether your business thrives organically or struggles to find its footing. Think of it as laying down one of the cornerstones of your enterprise.

The Backbone of Business Growth

When service and delivery are executed to perfection, your business experiences an effortless and natural growth trajectory. This dimension of your operation is akin to a sturdy foundation, underpinning all your efforts and endeavours.

Conversely, missteps in service and delivery can lead to customer dissatisfaction and a host of issues. Unmet expectations can result in an influx of customer complaints and frustration, creating hurdles in your business’s path.

Bridging the Gap: QEWS Framework

To navigate this challenging terrain effectively, I propose a framework that encapsulates the key facets of service and delivery: QEWS. This acronym represents four crucial elements that, when fine-tuned, lead to a streamlined and successful business operation.

Quality: Beyond Workmanship

“Quality” in this context transcends mere workmanship. It encompasses a comprehensive quality system that ensures every facet of your core service is impeccable. Evaluating team performance and devising strategies for consistent execution are paramount. Consider tools such as checklists, regular training sessions, detailed photos, and instructive videos to establish a robust quality framework.

Expectations: Crystal Clear Communication

Setting explicit “Expectations” for your team is indispensable. This extends beyond tasks and includes factors like attire, customer interactions, and leaving job sites in pristine condition. It’s essential to avoid assuming that your team shares your perspective. Instead, provide clear point-form instructions and comprehensive training to align expectations across the board.

Workflow: Seamless from Start to Finish

A well-structured “Workflow” is vital from the moment a job is initiated until its completion. This entails managing incoming calls, scheduling, task execution, and finalisation. By meticulously defining and assigning each step, you ensure consistency and minimise oversights, such as forgetting to invoice or neglecting essential site documentation.

Systems: The Backbone of Efficiency

Lastly, “Systems” encompass a range of tools, with a special focus on electronic systems accessible via devices like smartphones and iPads. Utilising job management applications such as “Fergus,” “SIMPRO,” or “Tradify” streamlines operations. These apps facilitate photo uploads, drawing storage, customer information gathering, and seamless task continuation without excessive reliance on calls to you or your admin team.

Taking Action: Your Path Forward

The road to mastering service and delivery begins with prioritising Quality, setting crystal clear Expectations, establishing a seamless Workflow, and implementing Effective systems. By addressing these four pillars, you’re not only creating a robust foundation for your business but also setting it on a trajectory of consistent growth and success.

For a visual representation of how these elements come together, I’ve prepared a downloadable systems flowchart to kick-start your journey toward operational excellence.

tradie service

Mastering Productive Team Meetings

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Mastering Productive Team Meetings in Your Trades Business

Team meetings—a phrase that can either evoke enthusiasm or a sense of dread, depending on your experience. In the realm of trades businesses, running effective team meetings is often a challenge that business owners grapple with. But fear not, for we’re here to guide you through the art of conducting productive team meetings that yield tangible results. Whether you’re dealing with a small team or a larger crew, these strategies are designed to ensure that your team meetings become a valuable asset rather than a time-wasting chore.

Setting the Stage: The Agenda

The first and foremost rule of thumb when it comes to team meetings is having a well-structured agenda. This agenda serves as your compass, guiding the discussion and ensuring that every relevant topic is covered. Imagine an agenda that’s so clear and concise that anyone, even in your absence, can lead the meeting seamlessly. A monthly or bi-monthly team meeting can be particularly impactful, and giving the opportunity for others to lead fosters engagement and shared responsibility.

Opening on the Right Note

The way you start a team meeting lays the foundation for what follows. Begin by giving every team member a chance to speak individually without interruptions. This provides a platform for them to share their thoughts, concerns, or any work-related matters that might be on their mind. Encouraging an open dialogue from the start sets the tone for a participative and collaborative session.

Celebrating Wins and Direction Setting

Acknowledging accomplishments is not only gratifying but also motivates your team to continue excelling. Use this time to highlight what’s been going well for the business or any significant achievements by team members. Moreover, as a business owner, share the overarching direction of the business. What are the goals? What’s the vision for the next one to two years? This provides a tangible framework for team members to grasp and align themselves with the company’s journey.

Cultivating Your Culture

Addressing culture niggles or issues regarding adherence to the rules of the game is an integral part of team meetings. This is where your culture statement shines. If there are concerns about phone usage, punctuality, or any other behavioral aspect, refer back to your culture statement. This ensures everyone is on the same page and comprehends the values the business stands for. It’s an opportunity to reaffirm and realign with your company’s ethos.

Delving into Operations

Team meetings are also a forum for discussing the operational aspect of your trades business. Share insights about upcoming jobs, customer feedback, and any operational updates that need to be communicated. This segment keeps everyone informed about the nuts and bolts of the business and promotes transparency.

The Key: Regularity and Consistency

The most critical element in the recipe for successful team meetings is consistency. Regularly scheduled meetings that happen without fail keep the momentum going. Even if you can’t be present, having a comprehensive agenda ensures that the meeting continues smoothly. When team members know that meetings are a consistent part of the workflow, they become more engaged and accountable.

Your Meeting Starter Kit

To help you kick-start your journey to effective team meetings, we’ve prepared a meeting starter kit that you can download from the link below. This resource is tailored to trades businesses, offering a roadmap to structure your team meetings for maximum impact. Use it as a catalyst to transform your team meetings into dynamic sessions that drive collaboration, innovation, and progress.

Team meetings in trades businesses are more than just obligatory gatherings; they’re a gateway to fostering a culture of communication, alignment, and productivity. By implementing a well-structured agenda, embracing open dialogue, celebrating successes, addressing concerns, and diving into operational insights, you’re equipping your team to navigate challenges and seize opportunities with collective strength. Don’t miss the chance to elevate your team meetings—grab your meeting starter kit now and embark on a journey of transformative meetings that propel your trades business forward.

DOWNLOAD YOUR TEAM MEETING AGENDA GUIDE HERE

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Dealing With Non-Billable Hours

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Navigating Non-Billable Hours in Trades Businesses

In the world of trades businesses, where every minute counts, the concept of non-billable hours looms as a challenge that can significantly impact productivity and profitability. These non-billable hours encompass tasks that don’t directly contribute to generating revenue—activities that can often slip under the radar but play a crucial role in the overall functioning of the business. Today, we’re delving into this aspect and presenting a unique approach that can transform the way trades businesses address non-billable hours.

Before we dive into the strategy, it’s important to acknowledge that non-billable hours are more than just a minor inconvenience. They can encompass various activities, from administrative tasks and travel time to training sessions and project planning. While these tasks might not result in immediate revenue, they are undeniably essential for the smooth operation and growth of a trades business.

Reverse Thinking Strategy

Now, let’s talk about the reverse thinking strategy, a powerful concept that flips the traditional approach to non-billable hours on its head. Rather than solely focusing on the billable hours that your team is clocking, the reverse thinking approach shifts the spotlight onto the hours that aren’t billable. It’s a shift from “How much can we bill for?” to “How can we minimise non-billable hours?”

Consider the scenario of a plumbing business. Imagine there are four team members: Tim (the owner), Rob, Blake, and Luke. Instead of dissecting the billable hours of each team member, the business adopts the reverse thinking strategy to address the non-billable hours.

Tim, for instance, spends 1.5 hours on non-billable tasks. Rob’s non-billable hours amount to 1 hour, while Blake and Luke each have 0.5 hours. These hours could involve tasks like quoting, administrative duties, cleaning, or even training, which might not directly translate into revenue-generating work.

The pivotal step here is to recognize the importance of allocating a portion of non-billable hours to job-related activities. In this example, the plumbing business mandates that all team members, apart from half an hour, must dedicate their non-billable hours to job-specific tasks.

To implement this strategy effectively, the business utilises a job management system. This system not only helps differentiate billable and non-billable hours but also aids in tracking how non-billable hours are allocated.

Moreover, communication plays a significant role. The team members are educated about the reverse thinking strategy and the necessity of minimising non-billable hours. It’s a collective effort aimed at boosting productivity, enhancing the business’s performance, and ultimately contributing to its success.

Tracking The Progress

Tracking progress is another crucial component. The business employs a whiteboard to visualize and update the non-billable hours allocation on a weekly basis. This transparency not only keeps everyone accountable but also fosters a culture of productivity and responsibility.

The reverse thinking strategy offers a fresh perspective on tackling non-billable hours in trades businesses. By actively managing and allocating these hours to job-related tasks, businesses can strike a balance between essential non-revenue-generating activities and revenue-generating work. It’s a proactive approach that not only optimises productivity but also drives growth and efficiency. If you’re intrigued by this strategy or have implemented a similar approach, we’d love to hear your feedback. Let’s work together to empower trades businesses for a more productive future.

Find out more by grabbing a copy of my two Wealthy Tradie Books

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Creating a Positive Culture in Your Trades Business

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Creating and Sustaining a Positive Culture in Your Trades Business

In the dynamic world of trades businesses, the significance of cultivating a thriving workplace culture cannot be overstated. A healthy culture not only enhances productivity but also reduces employee turnover rates and fosters an environment where everyone can thrive. So, how can you build and maintain an exceptional culture that resonates with your trades business? Let’s explore some actionable steps and insights that can make a substantial difference.

Documenting Your Culture

The first step towards establishing a great workplace culture is to document it. This involves putting your culture’s values, norms, and expectations in writing. While this might sound like a formal process, it’s crucial for ensuring that every member of your team understands and embraces the culture you aim to foster.

In the context of trades businesses, where practicality is often favoured over elaborate corporate jargon, adopting a point-by-point, rule-based approach tends to be more effective. Addressing specific areas of concern such as start and finish times, phone usage policies, vehicle protocols, and sick leave procedures can set clear expectations and minimize misunderstandings.

Tackling the Sore Points

We’ve all encountered scenarios where employees start off strong but gradually slip into behaviours that compromise their performance and dedication. Punctuality begins to waver, and standards begin to dip. To counteract this phenomenon, having your culture documented and accessible becomes invaluable.

By clarifying expectations about crucial aspects such as work hours and behaviour protocols, you can prevent the erosion of standards that often creeps into a business. Imagine having a clear policy on start times that’s not only communicated but also visibly available for everyone to see. This not only reinforces discipline but also acts as a reminder of the standards that the business upholds.

Integration into Training and Communication

While the documentation of your culture serves as a foundation, integration is key. Every new team member should be introduced to your culture as part of their training process. It’s an opportunity to emphasize the values that underpin your business and lay the groundwork for consistent behaviour.

Moreover, effective communication is a linchpin of sustaining a positive culture. If there are any changes or updates to your culture’s guidelines, everyone in the business should be promptly informed. Whether it’s through regular meetings, digital channels, or internal announcements, keeping everyone in the loop ensures that the culture remains alive and relevant.

A Culture Template for You

To facilitate this process, we’ve prepared a culture template that you can readily download from our website. This template is designed to cater specifically to trades businesses, offering a structure that’s easy to understand and implement. By entering your details below, you’ll receive immediate access to this valuable resource that can act as a catalyst for transforming your workplace culture.

In conclusion, building and maintaining a strong culture in your trades business requires dedication, clarity, and consistency. By documenting your values, addressing potential challenges, and integrating your culture into every facet of your business, you create an environment that not only drives productivity but also nurtures a sense of purpose and unity. Remember, a thriving culture is an investment that yields dividends in the form of engaged employees and sustainable growth.

Don’t miss the opportunity to enhance your trades business’s culture. Unlock the culture template by clicking here to download then you can embark on a journey of positive transformation today.

team players

 

Should Trades Businesses Charge Call-Out Fees?

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Hugh Bowman discussing call out fees

Should Trades Businesses Charge Call-Out Fees?

Picture this scenario: you run a trades business, and the debate about whether to charge customers a call-out fee is a constant thorn in your side. It’s a predicament that countless tradespeople face, and the truth is, not many customers relish the idea of a call-out fee. So, where does that leave us? Let’s delve into this contentious topic and shed some light on the matter.

For instance, imagine you’re at the helm of a trades business that tackles a handful of small projects each day. Say your charge-out rate per hour stands at $100—an amount determined by meticulous calculations or industry standards. This rate is meant to cover various overheads, including holidays, sick leave, superannuation, and other costs for your team.

Now, here’s the crux of the issue: how much do you charge during those hours that your team isn’t directly on-site? Let’s say they’re only on-site for four hours. If you bill exclusively for those hours, what about the time they spend driving, running errands, and handling tasks not related to the project at hand?

It’s a dilemma that most small trades businesses grapple with. Those “off-site” hours are laden with various activities—washing equipment, visiting suppliers, fetching parts, and tidying up after a day’s work. The question then becomes: who foots the bill for these activities? This is precisely where the concept of call-out fees enters the picture.

When explaining the rationale behind call-out fees, you’re essentially elucidating that it encompasses more than just driving to the location. It’s about compensating for the non-project-related activities that contribute to the smooth functioning of your business.

Guidelines For Billable Work

Here’s the bigger query: How do you establish clear guidelines for what constitutes billable work and what falls under ancillary tasks? This is where the notion of billing rules comes into play. Establishing a set of rules that delineate what is attributed to the job and what pertains to other activities is crucial.

In fact, some businesses go the extra mile by compiling a comprehensive list of billing rules. These guidelines provide a structured approach for your team to discern what should be accounted for in a job’s billing and what should be attributed to tasks like workshop duties or non-productive time.

For those intrigued by how this is executed, you’re in luck. We’ve prepared a downloadable resource that outlines a sample set of billing rules. This resource not only empowers you but also serves as a training tool for your team members, ensuring transparency and consistency when it comes to charging for your services.

The call-out fee conundrum is no small matter for trades businesses. Striking the right balance between charging for on-site hours and compensating for the intricacies of running a business is a challenge that requires careful consideration. By implementing well-defined billing rules, you not only clarify expectations for your team but also establish a fair system that respects the diverse aspects of your trades business.

Find out more by grabbing a copy of my two Wealthy Tradie Books

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How Much Should Your Tradie Business Charge?

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how much should you charge

How Much Should Your Tradie Business Charge?

The age-old question of determining the ideal pricing strategy is a conundrum that frequently perplexes tradie business owners. As a complex and multifaceted issue, there’s no one-size-fits-all answer. While I can’t cover all the nuances in a single blog, I can shed light on the key considerations that often occupy the minds of tradie entrepreneurs.

The Balancing Act: Customer Loyalty vs. Profitability

For many tradies, the dilemma revolves around striking a balance between retaining long-term customers and ensuring profitability. The value of a loyal, longstanding client cannot be overstated, and the prospect of alienating them with sudden price hikes is a valid concern.

Crafting sustainable relationships while covering costs and generating profit remains a top priority for tradie business owners. They’re acutely aware of the investments they’ve made in equipment, aiming for long-term sustainability and profitability.

Starting with the Fundamentals: Understanding Costs

One of the foundational steps in tackling this challenge is delving into the core costs of your business. This encompasses not only direct expenses like materials but also overheads, labour costs (including holidays, overtime, and insurance), and your own earnings as the business manager or owner.

Knowing your costs inside out is pivotal. It provides a solid launching pad for shaping your pricing strategy, ensuring that each project contributes to covering your expenses while allowing room for profit.

The Profit Factor: Balancing Income and Growth

Determining how much you should be earning as the business owner or manager is another critical facet. This entails considering your long-term goals – are you willing to earn less in the initial growth phase? Your remuneration should eventually align with your aspirations for the business and your personal satisfaction.

The interplay between your personal earnings and the business’s financial health adds a layer of complexity to the pricing puzzle.

Gauging Market Dynamics: Price and Demand

As you navigate the pricing landscape, it’s imperative to gauge what the market can bear. Exploring how much customers are willing to pay for your services requires a blend of market research and intuitive understanding.

Balancing your pricing strategy with the market’s demand elasticity is a strategic move that directly influences your business’s growth trajectory.

Tailoring Your Approach to Your Goals

Deciphering the “right” pricing approach hinges on your unique business goals. Are you striving to establish a premium brand with higher rates and potentially less frequent projects? Or do you envision a bustling enterprise that stays busy with a more moderate pricing structure?

The right price is a reflection of your aspirations, your business model, and your desire to balance workload and remuneration.

Navigating the Terrain: A Step Forward

While the question of pricing remains intricate, a foundational step is understanding your costs. This knowledge empowers you to set accurate charge-out rates that cover your expenses and propel your business toward profitability.

For an in-depth guide on calculating the real wage cost in your business, we’ve prepared a video resource. Click the link below to access it. This tool can kick-start your journey towards crafting a comprehensive pricing strategy tailored to your tradie business.

Remember, there’s no one-size-fits-all answer to the pricing predicament. Your business’s uniqueness and your personal goals will guide your approach. With a solid understanding of costs and a strategic outlook, you’re equipped to navigate the terrain of pricing with confidence.

Explore the wage cost calculation guide here and take the first step toward establishing a pricing strategy that aligns with your vision for your tradie business.

 

Find out more by grabbing a copy of my two Wealthy Tradie Books

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Boost Quote Acceptance Rates in Your Trades Business

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Strategies to Boost Quote Acceptance Rates in Your Trades Business

Picture this: you’ve meticulously prepared a quote for a potential client, factoring in every detail to provide a comprehensive estimate. You send it off, waiting eagerly for their response. But more often than not, that response might be an objection. These objections can become stumbling blocks, hindering the acceptance of your quotes. Yet, fear not, for there’s a way to navigate these objections and significantly enhance your acceptance rates.

Understanding the Obstacle

In the realm of trades businesses, objections to quotes are a common hurdle that can leave business owners perplexed. Handling objections effectively is a skill that can dramatically influence your success. Many business owners, however, find themselves uncertain about how to address objections, which often leads to hesitancy in following up with potential clients.

The truth is, tackling objections head-on is a game-changer. Even if you address objections with a success rate of around 70%, you’ll witness a substantial improvement in your quote acceptance rates. This transformation isn’t just about increasing numbers—it’s about honing your communication skills to create a bridge between potential clients and your services.

The Objections: Breaking Them Down

When potential clients respond with objections to your quote, it’s not a closed door—it’s an opportunity. Objections can manifest in various forms. Some common objections include:

Price Concerns: “Your quote seems a bit steep.”
Time Doubts: “I’m unsure about the time frame you’ve provided.”
Decision Hesitation: “I need more time to think about it.”
It’s crucial to remember that objections are a natural part of the decision-making process. They indicate interest and engagement, rather than rejection. What truly matters is how you navigate these objections.

The Art of Agreement and Scripted Responses

The first golden rule in addressing objections is agreement. When faced with an objection, begin by acknowledging the potential client’s concern. Agreement establishes a rapport and demonstrates that you’re attentive to their needs.

For instance, if the objection is about the price, your response might be: “Yes, I understand that the quote might appear high. Are there any other aspects that you’re considering?”

Following agreement, having scripted responses ready is a lifesaver. Scripts provide you with a strategic framework to guide the conversation. With scripted responses, you can pivot the discussion from the objection towards finding a solution that aligns with the potential client’s needs.

Empowering Potential Clients to Explain

In the art of objection handling, giving potential clients room to elaborate is invaluable. Allowing them to voice their concerns not only helps them feel heard but also equips you with vital insights. Letting them explain their hesitations opens the door to a deeper understanding of their perspective.

Once they’ve expressed their concerns, you can directly address the objection. With a well-crafted response, you’re not just responding to their objection—you’re tailoring your message to their specific worries.

Elevating Your Success Rate

Dealing with objections upfront is a masterstroke that can revolutionise your sales approach. By embracing objections as opportunities for meaningful conversations, you’re building trust, credibility, and rapport with potential clients. Each objection handled with finesse becomes a stepping stone towards increased acceptance rates.

If you’re eager to delve into a more detailed framework for handling objections, you’re in luck. We’ve prepared a comprehensive script that you can download from the link below. This resource equips you with the tools to navigate objections effectively, transforming them from barriers into gateways of success.

Objection handling isn’t about overcoming hurdles; it’s about building bridges. In the world of trades businesses, objections are a precursor to acceptance. By mastering the art of agreement, scripting responses, and empowering potential clients to share their concerns, you’re setting the stage for a more profound connection that transcends mere quotes. Don’t miss the chance to transform objections into opportunities—grab your script and embark on a journey of elevated quote acceptance rates today.

tradie on the phone quoting

Following Up on Quotes: A Comprehensive Guide

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Mastering the Art of Following Up on Quotes: A Comprehensive Guide

Discussing the topic of following up on quotes might not ignite excitement for everyone, but let’s face it, this aspect of business is often the key to success. How you follow up on quotes reflects not only your dedication but also the integrity of your promises made even before the quote was given.

The Neglected Follow-Up: A Common Misstep

The frustration around this topic is undeniable, as many tradespeople admit to the occasional lapse in follow-up efforts. However, any level of follow-up is a step in the right direction. At the very least, remember to touch base with potential clients – a simple act that sets you apart.

The timing of your follow-up is essential. The consensus among businesses is to wait between three and seven days before reaching out after sending a quote. While larger projects might warrant a bit more time, quicker responses are expected for smaller jobs. Striking a balance between patience and proactiveness is key.

The Who and How of Follow-Up

Now, who should take charge of follow-up? Ideally, it’s you. As the business owner or someone well-versed in sales and your trade, your personal touch has immense value. Your familiarity with the project and your ability to address any queries or concerns directly can make all the difference.

Alternatively, delegating follow-up to someone in your office is a viable option. However, this must come with a crucial caveat: ensure that the follow-up person is armed with a script or guideline to ensure a polished interaction. A mere “Do you want to proceed with the quote?” won’t cut it. Clients need to feel they’re in capable hands.

Unveiling the Effective Follow-Up Process

The process of follow-up isn’t confined to a single interaction; it’s a series of steps that speak volumes about your professionalism and commitment. Here’s how a well-orchestrated follow-up typically unfolds:

Inquiry Initiation:
When an inquiry comes in, it’s the beginning of a potential client relationship. Engage them in a phone call to discuss their needs and understand their expectations.

Information Exchange:
Following the initial call, email them relevant materials – past project examples, team details, or any other pertinent information that showcases your expertise.

Pre-Site Communication:
Before you head to the site, whether for an estimate or inspection, communicate with them via a call, email, or even an SMS. This reiterates your commitment to the project.

Site Visit:
Conduct the on-site visit and gather all the necessary information for a comprehensive quote.

Providing the Quote:
After preparing the quote, ensure you communicate clearly when they can expect to receive it.

Follow-Up:
This step is pivotal. The manner in which you follow up reflects your professionalism. Remember, a well-prepared quote holds the promise you’ve made.

The Sales Process as a Framework

However, the follow-up process doesn’t stand alone; it’s a part of a broader system – the sales process. Every interaction, from the initial inquiry to the final follow-up, forms a cohesive structure that shapes how potential clients perceive your business.

Positioning your actions is crucial. When quoting, if you promise to reach out within a specific timeframe to discuss the quote and clarify doubts, this commitment sets the stage for a seamless follow-up.

The takeaway here is that while discussing follow-up strategies is vital, understanding the broader context – the sales process – is equally essential. To help you on this journey, we’ve prepared a downloadable sales process template tailored for trade businesses. Click the link below to access this valuable tool, designed to not only guide your follow-up efforts but also enhance your overall business approach.

In conclusion, mastering the art of following up on quotes is more than just a task; it’s an embodiment of your dedication and professionalism. Utilize these insights, and remember that the true essence of follow-up extends beyond the quote itself – it’s a part of the comprehensive sales process that propels your business toward success.

Click here to download our specialised sales process template, and embark on a journey to optimize your approach to client interactions.

Your success begins with these foundational steps. Happy quoting and following up!

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Cost Of Sales Explained

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Understanding Cost of Sales: A Valuable Tool for Tradie Business Owners

In the world of business, knowing your numbers is crucial for making informed decisions and ensuring profitability. One essential aspect of financial analysis is the “Cost of Sales,” which plays a significant role in helping tradie business owners comprehend their financial performance and make strategic choices. Let’s explore what Cost of Sales is, its purpose, and how it can aid tradie business owners.

Cost of Sales, Explained:

The Cost of Sales represents the direct expenses incurred to produce the goods or services sold by a business. For tradie businesses, these costs typically include materials, wages, subcontractors, equipment rentals, and permits related to completing specific projects or jobs. Essentially, it encompasses all the direct costs associated with providing the services or products that generate revenue.

The Purpose of Cost of Sales:

The primary purpose of Cost of Sales is to enable business owners to gain a clearer understanding of their financial performance by separating direct expenses from other operational costs. It helps in evaluating the profitability of each job or project, making better pricing decisions, and predicting the impact of changes in sales volume on the overall profitability of the business.

Understanding Cost of Sales with an Example:

Let’s consider a simplified Profit and Loss (P&L) statement as an example. The P&L consists of three key components: Sales, Cost of Sales, and Operating Expenses.

Sales: This represents the total income generated by the business from its services or products.

Cost of Sales: This includes the direct costs incurred to deliver those services or products, such as materials, labor, subcontractors, equipment, and permits.

Operating Expenses: These are the fixed costs that remain relatively constant, regardless of changes in sales volume. Examples include rent, utilities, insurance, and administrative expenses.

For instance, suppose a tradie business with $100,000 in sales incurs $50,000 as Cost of Sales and has fixed operating expenses of $25,000. The calculation would look like this:

Sales: $100,000

Cost of Sales: $50,000

Operating Expenses: $25,000

Profit: $100,000 – $50,000 – $25,000 = $25,000

The Impact of Sales Growth:

Now, if the business experiences a doubling of sales to $200,000, the Cost of Sales would also likely increase the same ratio  to $100,000. The fixed operating expenses would remain unchanged at $25,000. The revised calculation would be:

Sales: $200,000

Cost of Sales: $100,000

Operating Expenses: $25,000

Profit: $200,000 – $100,000 – $25,000 = $75,000

The Significance of Cost of Sales:

As seen in the example, analysing Cost of Sales helps business owners predict the impact of changes in sales volume on profitability. By separating out direct expenses from fixed operating costs, tradie business owners can make more accurate pricing decisions, assess project profitability, and identify areas for cost optimisation.

For more insights on profit and loss, be sure to explore my other videos on the subject.

More tradie tips can be found in my free book “The Wealthy Tradie Book 2- How To Make Your Business Rake In The Cash”, you can grab a copy by following this link. Or you can book a free strategy session here. 

cost of sales