When it comes to Business Activity Statements (BAS), many tradies assume they need to rely on their bookkeeper or accountant. But the truth is, you can calculate it yourself—and it’s actually pretty simple! By understanding a few key reports in your accounting software (like Xero, QuickBooks, or MYOB), you can stay on top of your finances and be well-prepared for tax time.
What You Need to Know:
To calculate your BAS, there are three key figures you need to check:
1. GST Reconciliation
This report shows how much GST you’ve collected from customers and how much GST you’ve paid on expenses. Your BAS will require you to pay the difference. To find this, simply run the GST Reconciliation Report in your accounting software.
2. Withholding Tax – Payroll Activity Statement
If you have employees, you need to report the tax you’ve withheld from their wages. In Xero, this information is found in the Payroll Activity Statement. Look for the PAYG withholding amount—this is what you need to include in your BAS.
3. Company Tax Instalment Rate
This is an estimate of how much company tax you’ll need to pay each quarter. The ATO usually sends you a letter with your installment rate based on your last tax return. If you haven’t received it, check with your accountant or look it up in your ATO online account. You can adjust this rate if your business income changes significantly.
Check These Reports Before the Quarter Ends! It’s a good habit to review these reports before your BAS is due. That way, you’re not caught off guard by a big tax bill.
If you’re unsure about any of the numbers, double-check with your accountant—but by doing this yourself, you’ll have a much clearer picture of your cash flow.
Need help? I work with Xero, QuickBooks, and MYOB every day, so feel free to reach out if you have any questions.
In this video, business coach Hugh Bowman from ActionCOACH Geelong explains the key components of a Business Activity Statement (BAS) and why understanding it is essential for business owners.
A BAS is a report that businesses submit to the government to account for three main tax components:
1. Goods and Services Tax (GST)
GST is the tax collected on sales (typically 10%) minus the GST paid on purchases. The final amount payable depends on the difference between collected and paid GST. Businesses often see higher GST obligations in the final quarter of the year when work volume increases before Christmas.
2. Withholding Tax
This is the tax deducted from employees’ wages before they are paid. If a business increases staffing or incurs high overtime costs, withholding tax will also rise accordingly.
3. Company Instalment Tax
This is a forecasted tax amount based on the business’s previous taxable profit. The government estimates quarterly tax obligations based on the last financial year’s profit, typically applying a 25% company tax rate.
By adding GST, PAYG withholding, and company instalment tax, businesses arrive at their BAS amount.
For any further questions about BAS, feel free to reach out to Hugh Bowman.
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 request to have sent to you via the webform 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.
Get a Free Copy of my Script to Boost Quote Acceptance Rates
Scripts provide you with a strategic framework to guide the conversation and increase your success rate.
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. Utilise 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 optimise your approach to client interactions.
Your success begins with these foundational steps. Happy quoting and following up!
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.
How Can You Be Making A Profit But Not Have Any Cash?
As a tradesman or small business owner, you might wonder how you can make a profit, yet still have no cash available. It’s a common concern, and I’m here to simplify the explanation.
Let’s say your profit and loss statement in Xero or another accounting system shows a profit, but your cash is low. The reason for this disconnect is that your profit and loss statement doesn’t include certain essential factors that impact your cash flow. These factors are:
Taxes: Any taxes you pay, like instalment tax or withholding tax, don’t show up in your profit and loss statement. This means the money goes directly out of your account.
Debtors: If you have unpaid outstanding invoices from completed work (receivables or debtors), it can tie up your cash. Even though you’ve earned the money, you haven’t received it yet.
Loans: Payments for loans, like those for excavators, trucks, or vehicles, don’t appear as expenses in your profit and loss statement. They go towards reducing your debt, which affects your cash flow.
Stocks: Buying more stock than before can also reduce your available cash.
So, while your profit may look good on paper, these factors can affect your actual cash flow. Remember, most trades businesses use accrual accounting, meaning income is recorded when the work is done, not necessarily when the money is received.
If you need more information, I have other videos that explain profit and loss in greater detail. Feel free to check them out!
Mastering Customer Selection: How to Attract and Retain the Best Clients
In the realm of business, not all customers are created equal. Some are a delight to work with, while others can be a constant source of frustration. As entrepreneurs and business owners, we all strive to attract the best customers – those who value our services, pay promptly, and make collaboration a breeze. But how do we identify and secure these coveted patrons amidst a sea of potential clients? Let’s delve into the art of customer selection and explore the strategies to ensure you’re working with the cream of the crop.
Defining Your Best Customers
Before we can embark on the journey to attracting the best customers, we need to define what these “best customers” actually look like. Imagine clients who not only appreciate your work but actively refer others to your business. These clients are the ones who never question your invoices, meet their payment deadlines, and maintain a harmonious working relationship. In a word, they’re your raving fans. So, how do you ensure you’re targeting and nurturing these golden clients?
The “A,” “B,” and “C” Customer Classification
To streamline your customer selection process, consider categorizing your clients into three distinct groups: “A,” “B,” and “C” customers.
“A” Grade Customers: These are your raving fans – the clients you dream of working with. They value your services, refer others to your business, and make your job a pleasure. They are easy to work with, flexible, and always prompt with payments. Cultivating strong relationships with your “A” grade customers should be a top priority.
“B” Grade Customers: These are the middle-of-the-road clients. They provide work, and while they might not be as enthusiastic as your “A” customers, there’s still potential to elevate them to that level. Invest time and effort in understanding their needs, exceeding their expectations, and converting them into loyal advocates for your business.
“C” Grade Customers: Unfortunately, every business encounters the dreaded “C” customers – the ones who drain your resources, test your patience, and rarely align with your vision. They demand excessive attention, pay late (if at all), and overall, create more headaches than value. While it might be tempting to take on “C” customers, doing so can divert your energy from nurturing your “A” grade relationships.
Strategies for Attracting and Retaining the Best Customers
Define Your Ideal Client Profile:
Create a clear picture of your ideal customer. What industries do they belong to? What challenges do they face? Tailor your marketing efforts to attract clients who align with this profile.
Leverage Customer Data: Analyze your existing customer base to identify trends among your “A” grade clients. Use this information to refine your targeting strategy and seek out similar clientele.
Craft Compelling Value Propositions: Clearly communicate the benefits of working with your business. Showcase how you can solve their pain points and provide exceptional value.
Prioritise Relationship Building:
Invest time in building strong connections with your “A” grade customers. Show genuine interest in their success and make an effort to exceed their expectations.
Streamline Communication: Make it easy for potential clients to reach out and learn about your services. Use your “A” grade client insights to craft messaging that resonates with them.
Empower Your Team:
Share your customer classification system with your team. This way, they can help identify and prioritize the best clients, ensuring a consistent approach to customer selection.
Selecting the best customers for your business is not just about generating revenue; it’s about creating a fulfilling and prosperous working environment. By defining your ideal client profile, differentiating between customer grades, and implementing targeted strategies, you can attract and retain the clients who truly value your services. Remember, fostering a strong base of “A” grade customers not only sustains your business but also opens doors to more referrals and growth opportunities. So, take the time to identify and prioritise your best customers – your business will thank you for it.
Working Less: The Key to Achieving Work-Life Balance for Tradie Business Owners
Are you struggling to find a balance between work and personal life? As a tradie business owner, working long hours and sacrificing important family moments can take a toll on your happiness and well-being. Let’s look at effective strategies for working less while maximising productivity. By establishing clear rules and boundaries around your time, you can achieve a healthier work-life balance and prioritise what truly matters.
The Challenge of Overworking
Many tradie business owners find themselves working excessively, compromising their personal lives. They may miss important family events, such as their children’s activities or school pickups, leading to feelings of regret and dissatisfaction. The crux of the problem lies in the absence of time management rules. While they may start their workday early, lacking discipline around time leads to staying late onsite to finish off jobs or retreating to their home office after dinner to do bookwork. To break free from this cycle, it’s crucial to establish firm rules regarding working hours and commitments. By doing so, you regain control over your time and create space for what truly matters.
Setting Clear Rules
The first step is to set clear rules around working hours. You have to expect there are times when they are broken but there starts the slippery slope of continuing to do it. I recommend setting a maximum number of times per fortnight or month.
Personal experiences can drive the realisation that strict rules around working hours are essential. For instance, my personal journey began when I had five young children, all close in age and on certain days I had to be there for when they came home from school. . This necessitated a fixed schedule to ensure I could be there for them when they needed me. Establishing clear rules regarding your working hours and commitments helps you prioritise the most important aspects of your life. By adhering to these rules diligently, you maximise efficiency during work hours, allowing for quality time with family and personal pursuits.
The Power of Discipline
Discipline plays a vital role in achieving a healthy work-life balance. As a tradie business owner, it’s crucial to remain committed to your established rules and boundaries. By being disciplined about when you work and ensuring that everything else aligns with those commitments, you can make the most of your working hours. Delegating tasks, outsourcing, or simply letting go of non-essential activities become viable options, enabling you to focus on high-priority tasks. Embracing discipline empowers you to work efficiently, freeing up valuable time for family, personal hobbies, and self-care.
Working less while maintaining productivity is not only possible but essential for tradie business owners seeking work-life balance. By setting clear rules and boundaries around your working hours, you regain control over your time. Embracing discipline and adhering to these rules allow for efficient use of working hours, leaving space for cherished family moments and personal endeavours. Remember, by working smarter, not harder, you can achieve greater satisfaction and fulfilment in both your work and personal life.
Hiring an Admin Person for Your Tradie Business: When and Why?
Many tradie business owners often wonder when the right time is to hire an admin person. It’s a common question that arises when businesses are in the growth phase or have just started out. Often, the concern revolves around affordability. However, from a strategic perspective, NOT hiring and admin person is holding the owner and the business back.
Let’s explore the benefits of hiring an admin person and discuss when it’s the right time to bring them on board.
The Value of Time
By employing an admin person for a significant portion of the work week, you can regain valuable time to focus on more critical activities. In just a couple of months, the admin person’s support should allow you to reclaim additional days that can be utilised more effectively, whether it’s generating income or tackling essential tasks. As a tradesperson, your expertise lies in your trade, not in administrative tasks like bookkeeping. Allocating these responsibilities to an admin person who excels in such areas ensures that the work is performed efficiently and allows you to concentrate on activities that align with your skill set and income potential.
Leveraging Expertise
As a plumber, electrician, or any other tradie, your primary income comes from performing your trade. However, tasks such as bookkeeping or administrative duties might not be your strong suit. Hiring an admin person allows you to tap into their expertise, ensuring these critical tasks are handled proficiently. Rather than spending time on activities that aren’t your core competency, you can entrust them to someone who specialises in those areas. This not only improves the quality of the work but also enhances overall business efficiency, as the admin person can devote their full attention to these tasks.
Delegating and Expanding Responsibilities
Once you’ve hired an admin person, you can gradually delegate various activities, freeing up your time to focus on more crucial aspects of your business. To assist you in this process, I have prepared a list of tasks that you can delegate or train your admin person to handle effectively. By downloading this list (available at the end of this blog post), you can identify specific areas where their support can make a significant impact. Furthermore, as you become accustomed to working with your admin person, you’ll likely identify additional tasks to add to their responsibilities, creating a dynamic and productive working relationship.
Employing an admin person for your tradie business can be a game-changer. It allows you to regain valuable time, leverage your expertise, and focus on income-generating activities. Instead of trying to handle all aspects of your business, delegating administrative tasks to a skilled professional empowers you to excel in your trade and drive business growth. If you’re interested in exploring the possibilities of hiring an admin person, download the list of activities that you can delegate and maximise the potential of your business.
Three Essential Tips for Delegating Tasks as a Tradie Business Owner
Delegation is a crucial skill for any business owner. By effectively assigning tasks to others, you can free up valuable time and focus on high-priority activities that drive your company’s growth. Let’s explore three practical tips to help you determine which tasks to delegate. These guidelines will enable you to streamline your workflow, increase efficiency, and ultimately maximise your business’s potential.
Avoid What Drives You Nuts
As a business owner, it’s essential to recognise your strengths and weaknesses. If there are tasks that consistently frustrate or overwhelm you, chances are you’re not the best person to handle them. By delegating these tasks, you can ensure that they are performed by someone who excels in that particular area. This will not only alleviate your stress but also yield better results. Remember, focusing on activities you enjoy and excel at will allow you to leverage your skills effectively and achieve optimal outcomes for your business.
Automate Repetitive Tasks
Repetitive tasks can be time-consuming and monotonous, preventing you from dedicating your energy to more strategic endeavours. Look for opportunities to systematise these activities and delegate them to capable individuals. By creating clear processes and guidelines, you can empower your staff to handle these tasks efficiently. Automating or outsourcing repetitive tasks will not only save you time but also enable you to focus on more value-added responsibilities, such as business development, innovation, and client management. Embracing delegation in this context allows you to optimise your business’s productivity and drive growth.
Evaluate the Cost of Delegation
Consider the financial implications of delegating certain tasks. Reflect on the value of your time and the potential returns you could generate by concentrating on higher-level activities. If you find yourself engaging in tasks that could be performed by someone else, determine the actual cost of delegation. For example, if you spend time procuring supplies for your team, consider hiring someone to handle that task at a fraction of your hourly rate. Similarly, outsourcing bookkeeping or administrative duties can be cost-effective compared to the value your expertise brings to the business.
By delegating low-value tasks that fall below a specific dollar rate, you can ensure that your time is optimally allocated to tasks that yield higher returns.
