Watch this tutorial-style webinar from Fergus founder Dan to learn how to forecast your cash flow by working out your business's inflows
Transcript:
Hi, guys. Welcome GoToWebinar on coding invoicing tips. I'm Dan Pollard, planner and founder of Fergus and with me is Andy baker, Sparky and founder of ivillage IBD. And I said I just talk for about 30 seconds on how I got to be here. So I've been a plumber since I was 17, and I started work for myself when I was 22. And I went through a couple of tried business for the time I was 27 and I started thinking that about 29 with me. And in about eight years I built that to 25 staff and still did that plumbing company, which is one of the best things I've ever done. And I've also the founder of figure software, which I've been doing about eight years now as well. Andy? yes, my name's Andy Baker. I've been in the electrical industry for 22 years. I exited my electrical business last year in December, but started in 2007 as a hobby. I've got three little boys that we were. My job was to be looking after them and my wife on the business as well. So that was what I was going to be doing working part time. And then I quickly changed and I grew the business to 15 staff over this time and also developed a online platform for gas, but as an electrician to complete the compliance certificates for which is called ISO platform. So Yeah. And so the reason we're here today is just to share what we've learnt, it's what's going well, not going on in businesses just to try and help everyone out too so they can be successful in their businesses. Right so we thought we'd start here, what not to do. So classic quality mistakes, right? We've all made them. And so what are some of the ones I've made and learnt over the years? Some of it is piping quoting a job title, hoping that the extras would sort it out. That never works. This just never works. I mean, realistically, how well do jobs ever go well with labor materials with. It just doesn't. So if you can't win the job by pressing it, well, then it's silly. You can't try and win a job hoping it's going to work out. That's just bad business. The other things I've learned is not actually having the skills to do the work. So when we first joined doing trainline and getting into it and winning some big jobs, I actually couldn't drive a digger. So I used to get guys in to drive to guess what a hassle, trying to find guys to drop diggers and trucks and then the jobs would be delayed. Jobs wouldn't go well. We lost money. So having to actually get the right staff who had the right skills was a critical part of doing jobs. Andy yes, I agree with exactly what you're saying. I've certainly made some big mistakes quoting when I first started out, and you learn the hard way pretty quickly. One of the big ones missing materials. And this was before I actually implemented software like for Fergus to carry out to look after my stock control and also manage the materials being loaded directly to the invoice. It is it is very easy. And even when you start employing staff, they miss things as well. They forget about things. So it is very important to get this right from day one sort of thing. So you quote so you're quoting as you go to make sure that you're clear of what you allow for and put a good description on your quotes. One thing I'm not a big fan of quotes, to be completely honest. I would prefer to provide an estimate purely because it sometimes is out of your control of how the job actually runs. So if you can get away with providing an estimate, I would certainly suggest in doing that rather that rather than providing a fixed price quote, making sure that your materials are on site provides big efficiencies for how the job's going to run. Also a big no no is just don't quote just to win the job because it's going to come back and it's going to bite you particularly at the end of the job. Another, another one I learnt pretty quickly was doing labor only it's a big, big no. No because you're missing out in the margin in materials and you might imagine that you're making off year off your labor is not really going to cover too much. It's going to cover you guys wages obviously. And, and also it's going to cover your stat days, your bereavement, your holidays and that sort of thing. But that's that quickly soaks into that margin that you've got built into your labor. So it's a good idea also to know what's going what the going rate is out in the market. I used to check every six months to see who was charging, want to talk to other people within the trade as well. The other things I've learned is what I call executing at pace, especially on a quote at work. Right so we're not talking. You've got a little bathroom renovation. It takes a day. We're talking about a whole house lot or trying to sell this got some size to it as you've acquired the job, everyone quite reasonably talked to get the job. And so if you win that job, you have to actually be prepared to go at pace so that when you start you're going to crack through the work. So last part of that is making sure you've got everything ordered ahead of time. So that's correct. So if you're doing a drainage job or a big lighting job and you've tried to order the lights or the pits a few days out, delivery might take a week, might take 10 days, 14 days to get this piece of orders to come through. So you start the work, the guys get halfway through, but they can't execute this pace or speed because I got to stop full deliveries to come through. And then the hours just get wasted to go. Absolutely another one is not allowing for your small bits and pieces, even if it's a small bathroom renovation or a kitchen or some outside lighting, it's the small materials that are important and add up quickly. And if you mess these out, you're just digging yourself a whole lot. You're typically typical example as you conjugate beans, your junction boxes, your flush boxes and that sort of thing for the electrical industry. Yeah, it's easy to remember your cable, your labor, your circuit protection, your powerpoints, but it's the things behind that quickly add up. So building kit sets was a big one for me with carting and revising them frequently. Yeah, I was going to one of the points. Talk about is looking at. So in good job management systems like Fergus you can easily go to an old job and see what it actually costs because the bit costing and you've got to do that. So there's no point building it quite and going all this way at 5 k without checking any, any base in reality, you've got it right. So you could look at old jobs in history that you've done that Samuela, and you pull that up and go, huh, that's Steven k I quite like I was at Steven k because you have to get a feel for how long it actually takes you in reality to do jobs, not base case hoping and thinking what's going to happen because you think about all your jobs. How many times have you had to do repeat visits because the builder was like the customer didn't have the parts ready, the time wasn't finished, the Sparky was rough and broke. You broke your bits as they always do. Right and you got all these return visits that really add up on the hours. And so what you can do is you can all there really can try and manage the job a lot tighter so that doesn't happen and build the customers for the extras. Or you look at what things cost really cost you quite a bit and explain to the customer the realistic cost to do the job. But the other thing I was going to talk about, which is what you talked about, was not pricing a job is just not an option, right? That's just not an option. Whether it's an estimate or not quite doesn't matter. But if you want to get sort of past five blokes and you want to get to that ten, 15, 20 bloke range, you have to start learning to manage the customer expectation. And what that means is you have to start giving them a pricing range. And if you give an estimate of 5K or co, but if it's going to get much beyond that, you have to start letting them know you don't. As I say to my staff, we've thought we have the right to get paid for sure 100%, but we don't have the right to spend someone else's money without the permission. So if you see it's going to cost 5K and then you see the bill for eight k, of course they're going to be grumpy and realistically. So So your job is to manage these expectations and keep them informed of where the costs are actually landing speaking about that, we're talking about that 5K range. This actually goes back down to the $100 to $200 range as well, because if you quote or estimate that it's going to take two, three hours to do a job and it takes four or five, well, that's a huge increase from what the customers were expecting. They were possibly expecting a $300 invoice. $400 invoice. And you give them a5a $600 invoice. That's not big for you, but it's big for them. So you've got to be transparent. Yeah you you got to think when you got the dangers and that much, I just I travel under box 30 and a box with a crown. We all go off and then just charge a lot. How often do we see the bill for a day's work? Three grand for grain. It's the cost and construction is just inconceivable for most people. And so we mustn't forget on how unused they are to receiving such huge bills we have for us ten, 20, 30 grand jobs bills, nothing. Right? so every day we get so blasé about what things cost compared to the average, the average homeowner, we've become disconnected with the reality and it's also some of their expectations of what they can get for 200 bucks because what Bunnings is saying to sell toilets installed for $360 toilet and installation, so people are like, Oh you stuff is very cheap nowadays. And then we come and I go, now it's going to be like five grand, right? And they're like, what? What are you talking about? And so you've got to manage people's perceptions of reality. And if there's just such a big disconnection between the two, then you need to walk away. Yeah and another thing is as being a director or being an estimator of a company. You you need to know how long things take because you soon lose. You soon lose the knowledge of how long things take. And I've seen that when I was part of my guys and you actually end up on the quoting. And what I used to do was I used to go out on the toes every now and then just to see how long a job would take two to watch and install a PowerPoint or put up a light fitting. And I'll time it just to say, because you've got to take into account that travel time to pick up the material. If that's if you're not running efficiently and there are times that you're going to miss things, everyone's human, you're going to miss things off the list to collect from the suppliers. So you've got to make sure that you're allowing for that time as well. Put a bit of a buffer in there for your time. It if it's going to take half an hour to install a PowerPoint or if you're getting to the half an hour, 35 minutes because the extra five minutes are going to make a big difference to a quote at the end. And you got to remember, if you're a big city like auckland, parking is a huge issue in apartment blocks now, like actually getting a carpark, getting to town, finding a carpark there can take longer than actual jobs nowadays. You can lose an hour and a half, literally just trying to get in and get a park and get access through the security doors, through the property managers. Oh, it's so frustrating. And the people get the bill though. Here you have 20 minutes fixing the PowerPoint or change the washer on my washing machine. You're building for three hours. And so you've got to manage that expectation with the customer now. Otherwise I just think you're ripping them off. That's the first thing. When they see the invoice, they're going they're going to tear it to bits and go, if it was sorry, if it was a they're going to tear it to bits and see where they can save some money. But in actual fact, the quote is, it is what it is. But you've got to be like what we've seen. You've got to be transparent and know exactly what the customer needs to know what they're getting as what I was saying before, a good description of what you're doing and also put your tags in of what you have allowed for and what you haven't allowed for. We've done renovations before and we've tagged out the switchboard upgrade because we haven't been like we don't know what it is the builders are sent to plan through. So you've just got to make sure that your tags are accurate and that the clients are going to be rating them. So very important. What should we want? Invoicing? Yes. So what not to do? So what invoicing mistakes do we see most often when invoicing and how to avoid them? So for me, the number one mistake in invoicing is just taking too long to send it. Yes, it's this weird role. It's not if you take a day to see an invoice, the customer generally pays a day. If you take a month to see an invoice, they take a month to pay. If you're not worried about getting invoicing, to not worry about paying you, it's just sort of and they also forget this, the solution you delivered, right? And the more time that goes by, the more they devalue the effort that went into solving the problem. They forget they really wanted it done and they just go, oh, well, do you hear that one? What does it cost that much? Because I forget how pleased they are to get it done. So the quicker you can get the invoice since the quicker you're going to get paid and you move on from that, you need to see the step before that. You need to know your operating costs and your business as the most important part of your business. You can look at your gross profit, but that's not taking into account your operating costs. So you really need to know how much your operating cost is per hour per guy and then refer that back to the job of the profit that you're making off that job. One role I used to do, one calculation I used to do was every month to look at my operating costs and see what they were for the month, which which would also create a bit of a trend on what things are costing for your business. And it's very scary how think how quickly things things add up, whether it's whether it's marketing vehicle maintenance. I hate to think how much money are spent on vehicle maintenance because the vans get absolutely hammered. But you need to make sure that you're covering these costs when it comes to invoicing and you need to know your operating costs. Your I used to divide the gross the gross profit by the amount of hours that the actual job is taken, which would give me a gross profit per hour, which was a great figure, because I could then reflect that to my operating cost per hour per guy. One that was one of the big key changes in my business. And after I'd, after I'd learnt that things changed pretty quickly. And the bank account pretty quickly overnight. When they ever used numbers. Numbers Yeah. The other thing that we were good at doing is it's amazing how people don't complain until the invoice is seen. Right and so we employed an office administrator and she would call all the jobs the day before to make sure. The customer was happy because before we sent the invoice, we wanted to make sure the customer was happy to pay. And invariably you have 25 staff. We were going back to three or four jobs every day. A lot of it was a bit of silicone, a bit of rubbish, something was a bit dripping. But because we were going back within 24 hours and fixing those things, at least when the invoice was sent, that we knew the customer was at least happy to pay the invoice. Well, at least having received the invoice the next it was the office administrator would also call the customers who just received the invoice, i.e. to make sure they received the invoice. Because don't forget, things do end up in spam folder just waiting for that email addresses are wrong. Just because you see the email, it doesn't mean it's guaranteed to turn up. About 20% of invoices won't turn up for various reasons. I agree with that. So you've got to call the customer to see that they got it and then to see if they're happy. And then if you can't remember this key phrase, this little step. It was a really big turning point for us because as soon as you're talking about money, it's a little bit it's always a bit of a conflict, right? No one likes conflicts. Well, except me. I can do it, but I'm unusual. So we came out with this kilo statement. It's an IT and this is it. Pay attention now. It is. When can we budget on payment now? Rather than saying, when are you going to pay? We can expect the money. Wars are quite confrontational, but asking them when can we budget on payment? They will. Then volunteers are happy to pay or when they're going to pay. It just takes all the heat out of the situation to find out where they're at with the bill. And so if you've been doing it all right so far, you've seen the estimate, you've followed the job, make sure they're happy, you've sent the invoice. You're in a really good spot to get paid. If you've not done any of that process, you have another quote. You did a better job. It was more than they wanted. And you still ask at the net way we can, we budget on payment. They will still tell you what's going on for them. So you still got hope to remedy the situation and fix it up. I implemented this phrase after actually going to one of dance seminars a couple of years ago, actually. And he mentioned it to me. And I've used it and it works. It works. It comes across softly. It's not that it's not confrontational or anything like that. It's actually a nice way of, of asking it. And it's and it's the truth. How can we budget? Because the thing is, you need the money in your bank account. So you can pay your suppliers. So very important. Very important. Another another big mistake is obviously missing missing materials off of invoices and it can be easily done. The guys are busy out, not always, but having a good job management system, right? Fergus but by tracking all of the suppliers docs that are coming from, whether it's your russells, your ideal, your Scots into your system, you can't miss materials with the watch moves on to the next part, which is before you invoice. If you're using Fergus, make sure that all your suppliers dogs are allocated to jobs. Because I've made that mistake before and it's not a good look when you're seeing the second invoice enter your customer to say, hey, look, he's another $1,000 because we have an invoice you for the light fittings. You want to be there? No and the other thing that I understand is how many invoices we see that have such small descriptions. Yeah, like I don't get it. Like install PowerPoint. Yeah, Yeah. It's not good enough. It's not good enough. Right the customer doesn't understand. It's like when you get your bill from the mechanic and it's 5,000 bucks and it's got a whole list of parts and you go, well, I don't know what he did, but it's 50 and a box. But if he'd explained to you why the change to bright players, why it's a breach blade, the brake lines, what to do is better. You'd go, oh, well, that makes sense. So on your invoices you have to explain why what you did needed to be done so they can understand the value of this, of the service you provided, and you need to explain it to them. And once people explain, understand, they're much more likely to agree with you and always, always put your small items, your sundries. There were four line items that I always used to add to an invoice. They were travel. Yeah, sundries, testing and certification, which covers your compliance certificate and that we used to arrange for $20 for an AAC and $30 for a CIC. I know those gas but is they know how to charge for a compliance document. What a spark is need to learn off them. And then one that I'd learnt a couple of years ago actually was a health and safety Levy. So what I did was I, I worked out what my total health and safety costs were over the year and compared that to my total turnover to find out a percentage. And I didn't make money on it, but I just covered my costs of the health and safety. So you've got to take into account your downtime for you guys that are sitting in the workshop every week or every two. Weeks having a toolbox meeting. Yeah Your courses that you've got to go on it adds up really quickly. So I'd worked out that it was a 1.75% and on every single invoice I put a 1.75 health and safety Levy for every single job and I've never had one complaint about it. You things things changed when people are expecting to pay for health or safety now. Yeah, that's part of the thing. Yeah the other thing you got to have on your invoicing is a dispute, place and process. Now, this doesn't have to be anything complicated. It's just got to be three or four rules internally that everyone sort of follows. Who knows what to do? We used to joke internally that every dispute was pretty much involved by credit of 15 minutes labor or about 20 bucks. And so you think about your invoice. If the customer's grumpy, they're grumpy, right? No matter what you do, they're going to be grumpy for whatever reason. It only means you've missed ministry expectations. Right? and so what do you do? Do you spend weeks and weeks sort of arguing and going backwards and forwards or just want to authorize someone else to always give a 10% discount if they pay, write their name with credit card because you always get the cash back and move on. Right everyone knows cash flow carrying a business. So getting paid straight away. It's again is improving the efficiency in your business. If you can do your invoice here and there on the spot and collect payment, well, the job's done. Just our customers are happy. They don't have to worry about finding the invoice or waiting for the invoice to turn up in the air inbox. Then going onto the internet banking, they can just do it there on the end. So it's yeah, definitely agree with that. But if you can if, if you can give your office person the authority. So the blanket role is I'm sorry, Mr smith, that you're unhappy. I've got the authority to give you a 10% discount right here. Now, if you pay by credit card over the phone and that will solve most small disputes immediately the customer goes fine, I, I'll pay it now and is done and move on to the next job for the 200 bucks it might cost and discounts. It's not worth the effort of all of us people getting involved in trying to work out what happened. Was it half an hour here? It was an hour here was wasn't this was it's not worth it. You just need to get more work done. That's how you make your money. Yeah and learn from it to not put yourself in that place. The biggest factor, I see in this mistakes with invoicing is and I'm going to repeat myself, but knowing your operating costs, that's huge, as massive as probably one of the biggest things and a trade business that actually gets missed. And the owners of the business don't actually know what the operating cost is, because I can tell you now it gets out there really quickly. I think we do another webinar on that. Yeah, because I have two different approaches and get to the same place. So you'll hear two different ways of doing it. It'll be quite interesting. The other one about invoicing, my last point on the slide, my last point is this one and he mentioned it before was just checking that all the materials are on a job because you don't want to be in this place where you seen the customer or an invoice and they think it's full and final. And then you get another couple of invoices in from the supplier and you send them another invoice just for materials that you missed. And the job was already cost more. And you see in another invoice another 400 bucks materials and a statement. When you do that, you're on a holiday to nothing, not a good. You're not going to get any more work done. Right? you go, yeah, yeah, Yeah. And you're not going to get any referrals. So yeah, not a good look as take your time and make sure that all of the materials are loaded. I used to be able to pick out materials that were missing. The guys that the guys had right was still an exterior lighting circuit and there was no PowerPoint on. Hang on a minute. What did you what did you feed off purely because it was stock item, it was in the van, so they used it. So I'd make a phone call. So you need with the people that are invoicing, they need to be able to rate into the jobs, you know. So another important thing. Yeah, invoicing. It's a good point, actually. It's not on my list, actually. Invoicing my preference is that it's done by a tradesperson. The office admin staff can prepare as best I can with the labor and materials and description and try and get it. Do all the donkey work upfront. But the people have actually seen the invoices, looked over by tradesmen who have got a feel for it, who understand if it looks right, they go, well, that description not quite right, mature is not quite right, and they just know how to tweak it to get it just right. Yeah, absolutely right. Next slide, what not to do. What are your thoughts on what's leading to I'll start on. Yeah so I, I have done it it has worked but I'm not a Yeah. Not a big fan of it. I did it for a cup, a couple of companies just to get them in the door with them but then head to head to obviously up the price pretty quickly, which is again is not a good look. It's oscillating. Yeah, I'll put my hand up. I've done it. I'm not a big fan of it though. Same here. I've however always that there's always the but. Right so I've done. Water so does it cost? Literally, it costs us to try and get anything out, get the repeat business. But the problem is if someone's that tight, the friends of that tight and they're always that tight. And so networking, the customer always trying to save $0.50. And it's not the customer you want. So they didn't work Intended for apartment work. These are. And so tight. But I want to get the work thing in to be extras. Yes not make those big construction companies are so smart. Not a single picture they ever give you AI have I have done this before, actually. It does work. And it does make you come across as a trusting, trusting advisor. Really trusting a trusting electrician, plumber. And that is when you price for a price for a house, let's say a new build house, and make sure that you're supplying the down lights because you be carrying the warranty on that. But any pendants or any feature light that they want to purchase from, whether it's an outside company, whether it's lighting class, lighting, direct, whoever it is, pass your discount on to them, because it's just one of those things that as soon as you say that, they're like, oh, well, Thank you. Yeah and it's just a little bit of a gesture to them. Goodwill so here's we as lost leading worked for us really well. But it was a part of a proper long term strategy where there was always an upsell. So we got in to leak detection. So we spent 15 grand buying the leak detection equipment and trying to email, staff up. And I think we had a flat fee about to 40 right in those jobs would often take hours for the training to actually find that we can pinpoint it right. But 80% of time we then got the dig up, which was to actually replace the water main or clear the block drain. So you average water main replacement they must turn off grand and you ever straighteners repair was about five grand for big to go right so that was a proper loss any campaign that early to future work. So if you've got a strategy all that going on then go for it. But to just do leak detection for 240. And then move on. Now that's not good. You've you've got to teach you guys how to upsell. Upselling in a business is so important, and I'll give you a very basic example here, and that is Messersmith owns and asks for a PowerPoint to be replaced because it was broken. So Jimmy the electrician, turns up and replaces the power or goes to replace the PowerPoint and say to Mrs. smith, hey, have you have you thought about putting a integrated USB outlet in this PowerPoint straight away? You've upcycled it, you've created it's not going to take any longer to do the job, but you've actually increased the price of materials and your margins gone up by $33 or so. So for a job that you were going to make, say, $40 off that hour, all of a sudden you've made $70 off that an hour. Then moving on from that search protection as a switchboard. So there are around about 130 odd dollars, probably with a bit of a margin of about $50. So then all of a sudden, you throw one of those in at the switchboard and within an hour you've taken it from a 30 a $30 sort of profit job, brought up to a sort of 120, 130 per hour. And that's the key about upselling. And you you need to teach you guys hands and show them how important, important it is to run a little competition within your company. See see how many guys can put a USB out. It's in a PowerPoint for a month and give them a price. Give them give them a voucher out for their family to go to a restaurant or something like that. You just got to think outside the square when it comes to upselling, I think intrinsically loss leading applies to volume based selling. For example, supermarket can sell chocolate bars and toilet rolls on bulk. Right and they get you in the because you got to go hide a whole lot of other stuff. Whereas we're selling a time basically. And if we don't have the ability to upsell volume products or services on from a loss leading. So the exception though, is something like a leak detection, which is the ability to do that, right? Or maybe it's like smoke detectors and you get into a house and then you can upsell them on stuff like that. A smoke alarm system that's integrated into the alarm? That's correct. So if you got to do that, you've got to be really, really sophisticated and you got to get to marketing campaigns. And, you know, we're all very busy, so it's not worth it most of the time. But the upselling that's different, the better place to focus your attention. Be smart. Be smart about the way you do things. Yeah all right. So getting back to invoicing again, what? To make sure you do. Right? right. So how to get it right. So the other question is, what were the mistakes you we see most often on invoicing? This one is how can we get it right? So what do we do to make sure we get it right? I just want to start off saying if you don't get this right, you don't really have a business and that's pretty much going down the drain. So if you don't get your invoicing right, well, yeah, you're sorry, but pretty much. Yeah it's good to be back. Hosting again is so important on every job. And this is why it's so important to get you to get your invoicing spot on. Knowing what knowing or used to actually be able to know what certain guys were good at so or putting them on those certain jobs purely from what back costing of looking at every single job. I used to be a guy that such and such will put him on a service job and will put him on a renovation. We'll put him on a new board. So you need to actually dig really deep into your business to see who's good at what, because there's no point putting somebody on a big job that is our negative service work because he gets overwhelmed on the big job. So you really need to know your team. When it comes to invoicing and this is what's so important. I actually really agree with it. I didn't think of that, but that is 100% correct. If a guy like doing maintenance, then he's looking after the customer. Enjoying this job, is enjoying ensuring that the customer the customer likes dealing with that person. It's great. I mean, I personally hated maintenance and I was a first fix guy. This was my happy place. This is funny, actually, because I used to love I used to love the small jobs when I was on always the servicing and talking to customers and just building that relationship. And if you have the right person doing that in your company, you're going to get a really good name out there. And additionally, that's a really good point I've got make sure the invoice seems reasonable. And so it's a lot around making an invoice seem reasonable. So it's definitely putting photos and descriptions to explain the values you delivered, not just the solution. I can't stress enough how descriptions and photos are really important to show what you did to show the value thing. I think I a invoice that is well presented goes a long way as well. I read something back in the day by adding color onto an invoice. There's a certain percentage that it's going to sit better with the customer as well. And that's and I'm first to admit that the invoices from Vegas look look fantastic. I do I look professional compared to all the old ones. I got an invoice the other day actually from somewhere and it was just AI from an Excel spreadsheet look terrible. So it is important to get that right and you can do that with Vegas. So at this point, it might seem a little bit contradictory to the other photo, but not sitting double invoicing. Right but it's about knowing what's going on in the job. Right so if you've told the customer and this was a grand, right, and you've now got all the costs in and it's going to be three grand, are now in big trouble. So how do you manage that? You can't just send a bill for three grand and put it in the C in hopes we're going to work out. It's not going to work out. So how do you how do you manage that? So thinking about managing the customer's perception and expectation before using invoicing is really, really critical. This is what's critical to do the coding, it estimating and keeping up to date with things right before you do the invoicing, right. So managing expectations is called the fence at the top of the cliff. Managing reality is at the bottom, right. You don't want to be in this place, but if you hear, you hear, so how do we do it? So if you're in this place, the cost of way beyond what you thought was going to cost, you've got to cool the customer and start in that email and say, you this job. Yeah, putting it all together and it's getting a bit out of hand. Sorry about this. All these things happened, right? So you're emailing and calling them before you see in the invoicing. It's just managing the expectation that things are going to get a bit out. So really they're like, oh, OK, well, right, well, let me know. And so you leave that a week and then you send the first invoice, which is already going to be over. And so these are the first costs and it's already over. I'm sorry. I got some more invoices to come. I'm really sorry. We'll do a discount or make a payment plan, start softening the blow. And so then you might see two or three invoices in over a month if the bill is way out. But you've managed to soften the blow and manage that expectation, putting a payment plan, giving a discount, but you're talking it over, communicating all the reasons why. And what's going on for them rather than just dumping of the bill. You just can't dump a big bill on. I hope it works out. I think being transparent through the job as we can improve us are talking and talking to the customers, emailing them, letting them know where you're at through the job, having a status report of the job, actually sending them a weekly update of where you're at. Have there been any changes? Has there been any obstacles that you've come up on the cross? Just again, it's just being transparent. People want to know what's going on and they don't want to pay a $3,000 bill when it's been quoted at 1,000. They want to know that that's 200 cent all over that. That's unacceptable. And I would be pretty brassed off, too, if I've got. That from a contractor. So you've got to be transparent. The question is probably through my mind is, is you thinking but I'm only about three or four blokes. I'm super busy, I haven't got the time. How can I do all this? Like, how do you make it all happen? That's a really great question. You got to send me $1,000 cash for me to answer that for you. Yeah, I think I think it was one of my actually big thing. I've got a knife and I was going to say this later, but I'll say it now that one of my biggest mistakes when I started out was I was bottlenecking making the business. I didn't take my first guy on fast enough and it damaged my brand for a year or so because I was letting builders down. I lost a lot of builders because I was trying to do it myself. I was anxious about taking that first guy on. It's another overhead, but in actual fact, and it worked the opposite way and it damaged my business. So you need to know when you need to take your first guy on. And that is a hard question to know, but having some type of utilization of calendar, the calendar and Vegas will soon tell you how busy are you in front of you? How often does your phone ring for jobs? I remember I couldn't fit a job in for three or four weeks sometimes, which you don't ever going to find your phone, your back. So you need to know straight away when you're at Gap and you need to take somebody else home. This is more this is what my approach. So I went through two businesses in my early 20s that didn't work. My third one, I was determined never to be in this position again. So even when it was just me, just one guy, me, the guy, I still had a part time office administrator from day one and she would just start out probably just doing 10 hours a week for me. But I made sure my invoicing was going out every day, every second day. So her job was just there to make sure the materials were on the job and the labor I'd done, she put on the job because I'll first admit I'm terrible at doing my own labor as most bosses are. Yeah and so I just got her to do it for me every day and she would repeat draft invoicing for me every day. So when I came home, I would do it because it's really hard to come home from work. You go home by six, 630, you work in a five, you get home at 6:00 and you've got the kids. You lucky to have the office before 8:30. And if you've got to then start quoting, estimating, and then trying to do your invoicing, invoicing, that's going to be the first to drop off because you're tired, you get it and you make mistakes. Make mistakes. Ms materials. So to make sure I've got the invoicing out, I've had an office admin staff from the day one. Yeah, it is. It's knowing as knowing your calendar is knowing what's in here ahead of you for the next couple of weeks. But, and I actually, I, I took a tradesman on for a start rather than an apprentice purely because I couldn't send him out to any jobs. If it was an apprentice a minute, I had to be working as well as didn't have time to work on the business. So I would highly recommend and it was one of the best things I did was taking on a qualified tradesman as my first employer. Yeah, right. We have to move on. How do you make sure stuff quite accurately for you? This this is hard. This this is a big topic. We've got to go into full detail on this one because it's a big deal. But the number one point I've got here is they need to know one number to hit on the gross margin, right? Yes and you said so what is your overheads and what's your net profit? You want to make sure that's the margin that it goes out on. So let's say your overheads, a 30% of turnover and you want 10% gross profit, you need a 40% margin on your quotes to win it. So then how do you make sure that they've got the right costing on the quote right? There's no point in making 40% margin if you got all the wrong costs. And so two things. They must look at other comparable jobs you did to make sure they're in the right ballpark. Right you look at the similar house you did Because you got to be roughly about right. Yeah and then make sure you're building your quoting from your building materials or your favourites, whatever you call them, make sure your seats are as close to possible. So in the quietness this population sits and you check it against another quote, you've got it pretty close, so you know that your crossings are about right. And then imagine and then you're probably going to be right. And I think I think it's great for the guys or staff when, when they are starting to quote that they need to actually go and do their job as well just to see and then also see the back costing as well. Just to see actually how quickly time, time and material would disappear on a job should be open book with them. Show them your margin show. Show them you show them the profit profit that you might offer because it's pretty easy. I've seen plenty of jobs that it's actually cost me to do the job and not lot standing there like, Oh wow, I didn't realize it could blow out so quickly. And it does. So I think when you're, when you're training your staff. You need to keep a close eye on them for a start and run, run. Get them to run the system. Pass you beforehand. I can generally look at a house these days renovation or a new build and put a figure on it and be pretty close to it just from looking at the plan through it. And I got I got a point here. If you're having staff quoting a job, then it's up to them to manage the quote to come on budget. So then they're responsible for their actions. So they can't quote it and someone else manage that because then they can both blame each other. One point of not managing one body is not coding correctly. So the person who quotes, manages, and if they're going to, quote, try to win a job, which is realistic. But then your whole organization company needs to go up on efficiency, correct? So then you need to add in all of the materials really well and you need to manage the job pretty well. So that means guys are there on site by 7:30 working and they don't leave to five. They do 14 hours on a site not called offsite for an extra hour to do a job for the rest of agents. Like not usually for 10 hours. You don't leave to get your lunch. You don't need to give materials. You order them by phone. They get to limit and you get the bulk of it without you making sure you've got 10 hours productive work on site if you've quite a tight. That's a big one, actually guys hitting out to get lunch. It doesn't take like there's four guys on a site. So three or four guys on a site of three or four of them don't have to go and get lunch or they should actually be organized enough that they're getting their lunch on the way to site because you're losing you lose half an hour, going to pick up a pie or a row from a dairy, but then they'll also sit down for 15, 20, 20 minutes and it just blows the job out so quickly. So it's yeah, it's important to be a very efficient on a job. So you need to be heading around those sort of those low 90% utilization. Yeah four hours on average. Charge out. Yeah the other thing that of course it always comes back to the description. So if you've quite a tight you have got to make sure the description is so detailed for the homeowner because the homeowner you've got that, you've got the three things to manage, right? You've got cost, time and quality. So if you've cut quoted it tight, you're sacrificing quality. So you have to convey to the tradesmen and the customer what finish level you have allowed for. Because if working a flash home, say, in a flash suburb like rumours, they're actually an incredible finish. But if you're working in the back of beyond in the dark South Auckland and they just want to get the job finished cheap, they want a lower level. And that's all fine as long as everyone knows the deal. Greg yeah, we talk. I actually talked about this last year with a couple of guys at work. It's what we were known for, a high quality finish on our jobs and quite often there were times that we weren't winning them because we were overpriced and it was like, do we have to lower our quality as something that we didn't want to do? But you've got to look at all of these factors. Why aren't you winning the jobs as do as you quality to high. So for us for certain areas obviously what Dan said, if you're working in Raymond's or in the city or Omaha or anything like that unit, your quality needs to be out there. But if you, if you're working in the back and beyond, you can, you can do it, do it right and do it well. But you can possibly drop the quality just slightly to get it done where you have to. And if you want to get to 15, 20 staff, you can not pick and choose. Yeah so we were done 6,000 jobs a year. That's a big base to feed, right? You've got to take every job that comes in the door. And you have to meet the customer's expectation of what they want to pay. You cannot deliver what you want, you deliver what they want. And if they want cheap and cheerful, so still must be a must must comply. But you must deliver a cheap and cheerful solution. Asking asking for a budget before you even start quoting is as a great way of knowing whereabouts they are. What sort of budget have you got for this, for the electrical side in this house or in this renovation? And if they say sort of and let's say a bath, a bathroom, a kitchen, a couple of bedroom renovation, they say, oh, electrical. We're probably looking at about four or five grand. Well, it's not going to happen. It's not going to happen. So you really need to then you sort of then are able to understand what finish that you can give, but also understand your customer, too. You can then start explaining how you can help with this. Well, that's very important because that exploratory phone call around budget is so critical because you do not want to waste 2 to four hours quoting a job that you never had a chance of winning in the first place. Yeah, so having that budget discussion upfront is critical. If you cannot do that, if you just cannot talk about money, then you do. You're going to really struggle in a business. You've you've just got to get used to having those money conversations upfront. You've got to know what your customer wants. And there are customers out there just say, oh, we really got a budget. We just want a good quality job and you can deliver that. That's great that great jobs to have, but it's a small percentage of the jobs. So small. And when you've got 15, 20 staff doing thousands of jobs, you just got to get jobs and jobs done. Question yeah, and the efficient. So if you're doing that amount of work, you're going to be working on your efficiency, you're going to be back post and you've got to be seeing how you guys are going in each jobs. Very important. That's funny. We haven't discussed this much, but we've both had big businesses and it's funny, everyone at this level all has the same understanding of knowing how to manage the expectations of customers and sorting out the money conversation upfront. You just have to do it. Yes, absolutely. Right top tips on getting customers to pay on time. There is Fergus because I've got a I've got the credit card system. I can collect payment on the job there. And then it was a game changer. Win, win, win. You bought it out last year. A couple of years. Yeah, yeah, Yeah. So Yeah. Very, very, very important to collect payment as soon as you can because again, cash flow sign point, I think we've been making over and over and over again top tip is price up. First, talk about cost up first is number one foundation transparency with your customer upfront. What can they expect to pay manage that upfront, then deliver that. And then you get paid invoice dealing and with Yeah so important as Dan already talked about this if you've seen your invoice out two weeks afterwards, I guarantee it's going to take another two weeks for them to buy. And I've seen it myself that we had a couple of palm trees cut down at home the other day and it's not to come in and cut the stumps out. They sent that invoice that night and I was like, OK, at least get it out of the way. So I'll pay them that night. Whereas if they had have seen that through to me two weeks afterwards, I would have gone out, I'll printed out and I'll put up my and all that important. Yeah and unfortunately it's reality. So if you can invoice daily, you're going to get paid a lot quicker. The other thing is asking upfront when, when does the owner want to pay? So are they thinking they're going to pay the job? Are they going to pay deposits? Are they going to make progress payments? Does that mean if it's a bathroom innovation, it's going on for months, right? Some people only want to pay 18 and it's just not acceptable. So, I mean, he was just changing it to find pay at the end. But you've got to ask the customer what are they budgeting around payments so that you know, what you can invoice them for? Because also invoicing a big job after three months is not good for your cash. Right? you can't do it. You need to be doing regular progress, invoicing for good chunks of work. You're finished the demo you you've done the pre wire or the pre-plan standard invoice both the customers not expecting to pay it they won't. So you've got to talk about money upfront and and deposits and progress payments. You learn you learn pretty quickly. And I'm sure you've had a few customers, builders or companies that have unfortunately gone under. We know when they owe your money. And I, I had one that went under in December a couple of years ago and took me for 40k and it hurt and it was all, it was all of my Christmas holiday pay, everything just gone. And to be completely honest, that Christmas, that new year was terrible because all I could think about was work. How am I going to be able to pay these guys 40k gone. So what I had to do was I am I mean, the system. After that when it came around you renovations and you and you knew about. So we would go and do a pre-war and obviously the boys had put all the cables and flash boxes on and with they would do a count up of what is required to set off. Obviously that's pretty easy. If you quite correctly within Vegas you can do a bunch of materials. So we would place that order on the last day of the pre wire. So we would actually have the foot off here sitting in a box at the workshop ready to go. So if somebody had to go and let's say fit off the switchboard at the cut out stage or any work, let's say install the, the grilles or the vents for the fans when the scaffolding still up, all that material was at the workshop. So this comes down to efficiency again. And so within that first invoice we would invoice 75% of the total job because we've got the material sitting at the workshop ready to go. Worst case scenario, something does happen. At least you probably got paid for that. You can then return, you can then return, you retain your material. So you do learn from your mistakes. But that's one big one big tip that I'll give you as invoicing as much as you possibly can. And on that first progress payment, which is going to improve your cash flow, and also you're going to have your material sitting at the workshop ready to go. So if some of the builder does burn up because we all know builders want things done nicer, so at least the girls are going to be sitting or the alarms are and scaffolding is coming down next week. Can you come up? Can you come and put everything up on the foot on the painted house? So you just got a thing you've got to think outside the square. You've got to be constantly thinking of how to improve your cash flow in your business because, you know, to be fair, they are average cash flow terms was 27 days, right, because of a quota estimating pricing. So that's why I work. Right according to my pricing all the time, nearly every job be very rare for us to do a job without giving the customer an indication of price. The obvious had been staff call up after the job to make sure that customers happy to pay, make sure the job's done right. Then we send the invoice the next day of the admin staff, call the customer to make sure they got the invoice and they happy to pay, right? So there's a really good cycle. So we didn't actually have any trouble around normal jobs getting paid, but I learnt a very good lesson from a building company. We lost 50 to Kate. That really hurt. But they gave us a lot of work. And this is how I got caught and learned to change. That was a good lesson. Right and so they probably killed about three guys because the full time they were building a company that did bathroom and kitchen renovations, and they just did lots of them really, really busy. And we were working for them for a couple of years. But what was happening was they wouldn't always pay the full amount on all jobs. And so I had money outstanding going back six months. And it was a one grand here, a couple of grand one month, three grand over all these jobs. Little disputes and bits and pieces that we never quite sorted out and then had built up. And then I got one month didn't pay and the six months didn't pay. And all of a sudden the bill was getting quite big because was keeping three of my guys busy. So I didn't want to lose the work, but I was getting paid and I was like, oh, I want to work. And he's we've worked for him for a couple of years. And he's been pretty good. You know, he's a good guy. It'll come right then. And what happens? Because I'm not going under. All that money was gone. It was I, I still remember that day. I got the phone call and Yeah. Particularly in the same any time's bad. But December all of my holiday, I just. Just wiped out of me. So you've just got to be you've got to be one step ahead of them, to be completely honest. And unfortunately, you might, you might, you might. You have got that relationship with you builders and that. But you've just got to be very smart about the way you do business with them. Well, what we did after that rule is we just put bills on stock credit all the time. Yeah so we're give them 30 days, grace. So that could be 30 days overdue. But after that, it was just no, we're not coming back to do any work until the invoices are paid and all the disputes are cleared up. You're a party. You've got to protect yourself. You're number one. You've got to protect yourself. You've got a one you're looking after. For it was 15 staff the day and it was on the 2025 was you've got to be able to pay those guys. That's the most important thing is business has to be able to pay your bills as soon as you start, if never happened. But if you don't pay them, well, they're just going to be down the road. So and it's so hard to find good tradesmen near impossible. So you've just got to be you've got to be smart about it. And unfortunately, sometimes you typically have to put builders on stop grid. If I need something down now, they'll pay you and therefore, see, that's the thing, right? The only leverage and power you have in that relationship is to withhold your labor. They can't just call on the panel parking to come finish a job. No one's going to come in and finish your job partway through. No one's going to take warranty or liability for your job. So the only power you have is to withhold your labor and you must use that power and sort the money compensation out and get the money in your account. Because what I've learnt from that, if someone can't pay you, they've got flow issues in their business and you cannot get that, you cannot live. The thought of losing future work take precedence over cash flow and money out. Yeah, absolutely right. Yeah I couldn't agree more. Right last slide, guys. Any final tips? Oh, I'm going to repeat myself. A game about that costing as massive, huge back costing, knowing your operating costs down down to the hour as the most important thing that I can say. And as I said before, it changed my business overnight when I number crunch and I'm number crunched for months and months and months. And the great thing about this is that I could then view who was good at what job, and then you could put them all. You could put you could choose your guy that you put on the service and work or the bigger jobs. You start seeing trends differently. My big one is you can never put enough effort into the description. Yes what the outcome is and what the quality of finishes. You can never detail enough for the customer and the tradie because you just don't have to keep repeating conversations to the homeowner to try to remember what you thought you were going to do. Description is everything one point. And then my other point is you have to have the money conversation upfront. What's it going to cost? And when they're speaking to pay, when you sort that out, then the rest of it goes well from there. You just don't want to argue at the end once, because once you if you're arguing, once you've incurred cost, you are the one who's in the losing position you need to be again. You need to be transparent. Need to be transparent. Yeah why not? One one other tip that I. But I always work to and I still do. I even want to ask you, as all you've got to do is ask my outsmart your competitor, the pretty simple type. You've got to know what they're doing, but you've just got to outsmart them and do it slightly better because you're going to get a better name out there. I agree. Thank you guys for watching. Yes yeah, Thank you, chase. Thanks for tuning in this Tuesday. Thanks, major. Thank you.