The cost of doing business

Recently I was engaged by a new business owner, he’d started a workshop and been open 12 months. From the outside he looked to be doing quiet well nice premises 4 staff members already and a full book of work.

The first words he said to me when we spoke; “I am busy all the time, but we don’t seem to be making any money.” My mind jumps to a few different possibilities when owners come to me with this, but consistently when a great tradesman turns into a business owner it is around job quoting and costing.

Basing quotes on what they feel a job should cost rather than its actual cost. This oversight can unwittingly eat into the profit margins. A key factor often overlooked, the real cost of having an employee carry out the job. Often great tradies can do a job quicker than the average, an hour job for them realistically takes an employee 1.5hrs. over the course of the day there is 5 uncharged hours.

The cost of this over the week and then month is huge. At best the employee is breaking even and just covering costs more likely they are unwittingly losing money. Everyone feels busy, everyone looks busy hence the frustration. 

In this case its an easy fix we looked at the actual cost if doing business, adjusted the way we quoted and costed jobs. There was some trepidation around not wanting to be too expensive but when the alternative is not being in business we were able to work through it.

We were able to put some systems in place so that the business was able to understand daily if it was profitable adding an extra level of comfort to the owner, when he went home of an afternoon knowing that the business made money that day. 

All in all a great outcome the result instead of being ‘breakeven busy’ they are now busy being profitable, doing the same amount of work.