0800 461 219 1300906965 08081960868
0800 461 219 1300906965 08081960868
Home Business Coaching Webinars How-to Videos Training Webinars Blog
3 mins tradie tips

Real-life advice for growing your trades business in 2023

Dan
Dan

Founder

Real-life advice for growing your trades business in 2023

TLDR: Getting what you want doesn’t just happen. You need a concerted effort to mark it happen.

As a tradesperson, work and life are marked by ebbs and flows – some months and years the work is hard to keep up with and at other times it’s hard to find the opportunities to help make ends meet.

But – after 25 years in business – I’ve found that the cycle of ups and downs doesn’t have to be either potholes or a stretch of rocky inclines. As tradespeople, we seem to fall into the same patterns, meaning many of us are simply in survival mode.

Use your end-of-year shutdown to move beyond survival into controlling the pace and growth of your business.

In my experience, being in business is like a multi-sided dice. There are just as many sides to business and there is no one rule that will drive your business success.

But, beginning with understanding what a good business looks like is a great start.

What does good business look like for me?

  • I always have enough cashflow to meet all monthly requirements. I can pay all of my wages, taxes, suppliers and myself every month and I always have enough left over to feel that my business and my livelihood are safe.
  • My staff willingly want to work here and all of them understand that providing good outcomes for customers is at the centre of everything we do.
  • My customers use us again and refer us to other customers – this means we don’t seem to struggle for work as we are always being asked to look at new opportunities.

Location is a major factor that can impact your business growth

One of the major factors impacting your business growth and profitability is the location of your business.

Think about the population of the area, growth opportunities, the average wealth in the area and how many other tradespeople are competing for work.

When I was younger, I lived in a smaller New Zealand region in a place called Tauranga. Compared with Auckland, there were just not enough wealthy middle-class people. Most people were very cash conscious because they were retired or blue-collar workers which meant you were always working for the lowest quote. Tauranga had lots of net migration of other tradespeople – each competing to win work in a cash-conscious market. Margins were low, and customer expectations were high.

Where is your business best located to compete? Think about where there is not only population growth but higher investment and incomes in particular regions. Be first to market and establish a reputation to stop chasing work and have it come to you.

How do you know if you want a big business or a small business?

If your view of the size of your business is simply about the end goal of a comfortable retirement then calculating your business size and activity goals is simply a question of maths.

If your end goal is to retire with a mortgage-free home and a $100,000 per year income stream, then work backwards to see your options for reaching this goal.

For example, a $1 million home in Auckland will net about $40,000 a year, – meaning you’ll need four properties to generate a retirement income of $160,000 (less tax).

Including your own property, you will need a capital base of $6 million. If your business is generating $300,000 each year in net profit it will take you 20 years to get there. And if it makes $500,000 you will reach this target in 12 years.

What does this look like in reality? If your business has 10 vans on the road and each tradesman is earning your business $50,000 in profit you will reach the $500,000 goal.

While the maths is easy – the work isn’t. To get to this level of business activity you need to be prepared to take on a level of risk and commit to growth. Building good systems and processes and getting the foundation right is critical.

The foundation of success is finding and keeping people who understand “customer experience”.

Great customer experience – where you deliver a quality outcome on time and within budget – leads to more work. It’s not very complicated: the only foundation that any business should be built upon is “How do we surprise and delight the customer”?

My tips for planning your business in 2023

I’ve already outlined why planning is important, and why in today’s tough market it’s more important than ever before.

The first tips we’ve covered include understanding how big or small you want your business to be and putting customer service as your top goal.

Also:

1. Diversify your projects

Make sure you have a mix of projects in the pipeline – new construction, a repairs and maintenance schedule of commercial and residential clients. This means you’ll be better able to manage potential booms and busts of the economy. For instance, when home building slows you can then focus on major developments and infrastructure investment projects driven by the government.

2. Stay on top of your asset lifespan

Vehicles and equipment are key tools for your business – before 2023 begins take stock of the age of your assets and plan for maintenance or replacement. With technology impacting the lifespan of some equipment, also consider whether you should buy or lease those heavy ticket items.

3. Keep your people happy

Good staff are hard to find, and while pay packets may get them into the door, keeping happy and productive staff needs to be a focus. Understand your key roles and people, and make sure you have a contingency plan if you lose a person from one of your key roles. Make sure your staff are multiskilled, invest in training and development, recognise and value performance and build a workplace where people are loyal to your business and to each other.

4. Find and capitalise on your point of difference

One of the best ways to attract and keep business is to offer a skill or service that is either head and shoulders above your competitors or simply something other businesses don’t offer. Whether it’s excellent customer outcomes or a niche offering, leverage your point of business to win projects. For instance, as a tradesperson, you may offer a one-stop solution to a project that requires a plumber, electrician, carpenter, brickie and painter.

5. Define how you will grow

If business growth is in your plans for 2023, begin with planning for the type of growth you want. Do you want to increase your geographical spread? Do you want to win more customers in your current area of operation, should you offer more services? Or, do you want to build a strategy to take on larger projects?

Each of these ways of growing means different things. For instance, if you’re looking at working across a larger geographical area you may need more vans and staff who are based in different locations, whereas if you are offering more services you may need to upskill staff.

6. Value chain network

No business can survive in isolation. One way of keeping a funnel of new work is to have relationships with businesses across other trades. You can cross-refer work and partner on bigger projects – so you are splitting the efforts on building your client and project base.

Put your plans into action

Finally, taking these steps is fairly simple – and they make good business sense. To keep on track, check in with yourself every three months or so to understand if and how these actions are helping you grow your business in a way that you can control the growth and direction of its future.

Take on these actions and I can guarantee that by this time next year you will be celebrating not just the incoming year – but your success in 2023.

Your goal setting template

Ready to start? Download our goal setting template and create your 2023 action plan to grow your business.

Check
Get Started

Start your Free Trial

Setting up software shouldn't be hard, we make it a walk in the park.

All the tools you need,
all in one place.

By signing up you agree to Fergus' Terms of Service and Privacy Policy.

Growth tips from our trades experts straight to your inbox

Enter your email address below

Welcome aboard!

Stay posted for our expert trade tips straight to your inbox.