cash flow for tradies

From Mum and Dad Business to a Proper Company

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As a business coach who works exclusively with tradies, I often meet owners who know they have something special, but feel stuck. Sue and Ian from Ponds of Melbourne are a great example of this.

After 25 years in business, they had reached a point where progress had stalled. Cash flow pressure, tax stress, and the feeling of going backwards had taken its toll. They knew their business had potential, but they also knew they could not unlock it on their own.

One of the biggest turning points for Sue and Ian was recognising their own capability. Through structured coaching, they gained clarity around their numbers, confidence in their pricing, and systems that supported payment on the day. Simple changes, like introducing a capability statement and standardising how the business ran, shifted how they saw themselves, and how clients saw them.

Most importantly, they moved away from the “next job, next job” mindset and started running their business with intention. Better cash flow, clearer client selection, and reduced stress followed.

This is what happens when a trade business stops operating like a sole operator setup and starts running like a proper company. The skills can be learned, and the confidence grows with the right support.

If you are a tradie who knows your business could be better, but feels overwhelmed trying to do it alone, this story will resonate.

Please reach out if you want to chat.

Thanks
Hugh

How Can You Be Making A Profit But Not Have Any Cash?

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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!

More tradie tips can be found in my 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. 

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