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5 ways to invest for growth
while controlling costs
» » INSTALLER BUSINESSES – SUCH AS
locksmithing or security specialists - can
generate decent returns. However, not
many of us would say no to making a
bit more. Benjamin Dyer of Powered
Now examines 5 ideas for growing your
business while at the same time seeing
cost kept in check.
Talking to people running trade
businesses is nearly always enlightening.
I must be honest and admit that virtually
all of the ideas in this article come from
people that run installer and other trade
companies. So, I hope that they will
forgive me for stealing their ideas. Many
bosses of successful trade businesses have
great tips to share and I am glad to try and
be the conduit for some of them.
WIN MORE PROFITABLE QUOTES
You can grow your business in two
main ways – by winning more work and
by charging higher prices. We will look at
both of these.
Deciding on the price to quote is
difficult. Get your prices too low and
you can win lots of business, but then
it turns out to be unprofitable. Make
your quotes too rich and you don’t win
enough. In the worst case, where you are
poor at estimating and get your prices
both too high or too low, you only win the
unprofitable business.
This is why tracking costs against your
estimates over time is a good discipline.
If you do this you can gradually improve
the accuracy of your quotes. One of my
relatives runs a garden landscaping firm
and he was telling me that virtually all
of his employees used to run their own
businesses. They are good at the job, but
none of them were any good at estimating,
so they barely scraped a living.
The other trap to watch out for when
doing fixed price quotations is that you
shouldn’t take any unreasonable risks.
Gas engineer John McLaughlan has this
advice: “Suppose the customer wants a
boiler in an out-house, because it’s not
wanted in the kitchen. But when I drill
the wall, I find it is not stable. I then have
to give them the choice of either putting
in a new wall or moving the boiler to the
kitchen. That’s why on my quotes I always
say: ‘Subject to no significant discoveries
that could not have reasonably been
anticipated’. “
Time spent on making quotations look
professional is also a good investment. A
system can help, which I talk about below.
But you can get many of the benefits just
by using a well designed logo and nice
layout.
Finally, concerning quotes, my
company Powered Now’s research has
shown that one of the biggest frustrations
for homeowners is trying to get quotes
from installers. As a result, if you respond
quickly to quotes you will be able to win
higher priced jobs. This is because you
will come across as more professional
and secondly you will often be the only
bidder.
INCREASE PRICES
Undercharging for work is the single
biggest problem for installers running
their own businesses and can often lead to
their demise. Of course, I’m not suggesting
that you overcharge for bad work. But if
you do a great job, you should receive a
decent reward.
A quick clue is that if no-one ever tells
you “that’s expensive”, then you are too
cheap. It’s easy to feel that cost is the
only decider but that is rarely the case.
The Dacia Sanderos costs under seven
thousand pounds new. So, everyone
should buy it, right? Wrong, the vast
majority of people buy on value not just
on price and the cheapest doesn’t work
for them.
Charging a reasonable amount also
means you can show some flexibility.
So small insignificant changes can be
absorbed into the job leading to happier
customers.
Customers never excuse short cuts
because you are the cheapest. So, if that’s
your approach you often end up with low
income and angry customers which is a
bad combination.
LOCKSMITHJOURNAL.CO.UK | JAN/FEB 2019
Doing it the right way means you
will get more recommendations, which
is how 70% of domestic work is won.
Recommendations in turn sustain higher
prices as you are much more likely to be
pitching for jobs with no competition. It’s
a virtuous circle.
It’s easy to feel that the only way to
compete is on price but quality nearly
always trumps price as a business
approach.
KEEP MATERIAL COSTS DOWN
There is a simple word which explains
how to keep material costs down and
that word is planning. When jobs have
been properly planned you save costs in
several ways. This includes avoiding the
team sitting around waiting. Materials
are always to hand and wastage is
minimised.
Doing all of your buying in advance
will usually mean that you can get keener
prices and credit from your trade account
means improved cashflow. Then there is
the saving of time and fuel. That comes
from not needing to drive to the nearest
builder’s merchant to pick up emergency
supplies.
Finally, try not to leave anything
valuable or useful at the site. If I had a
ladder for every ladder that had been
left at my house, I would have …. a lot of
useful different types of ladders, which
I do! Why people have left them I really
don’t know. Even when we have reminded
them they still didn’t bother to pick them
up. Beats me.
FOCUS ON THE BIGGEST COSTS
All costs reduce your profits. The big
trap that can be made is to pay too much
attention to the little costs and not enough
to the big ones. To avoid this, look at your
end of year accounts and see where most
of the money is going.
The biggest costs could be your vans,
hire costs, insurance or even overtime.
You should start your cost savings where
the biggest potential lies. Investigate that
area, it’s where your time is best spent.