The Locksmith Journal Jan/Feb 2019 - Issue 60 | Page 24

24 • INDUSTRYNEWS PROUD SPONSORS OF THIS PAGE 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.