There are numerous reasons why business fail and these can include lack of planning, poor financial management and leadership, lack of profits or marketing strategy, just to name a few. In order to survive, a trade business owner needs to ensure that all the business functions are getting full attention. However, playing the jack of all trades within the business can lead to important business functions being unattended to.
Running a small business can be less complicated when you have a few clients, and everything is easily manageable including job scheduling and making payments for raw materials and tools. However, keeping track of these small daily transactions will start requiring more of your time as your business grows.
As your trade business grows, there will be a need to add new team members in order to service new and existing clients. Potential employees will come from different backgrounds and with different levels of experience. As the business owner, you need to be sure that the people you are hiring add value to your business.
It is common in business that clients may sometimes delay in paying what they owe you or even fail to pay up. The question then is, what can a tradie do in a situation where a customer fails to pay. One way to protect your business is to demand payment up front which can work for some clients but then you might end up losing business to other businesses that offer better payment terms. However, another means of protecting your business against bad debts is to get credit insurance. Credit insurance covers your business, so that you still get paid even if they go under or fail to pay you.
Understanding every aspect of your business not only ensures that you are in control of your business but also enables you to forecast and prepare it for the future. Tradies that are hands on usually focus on getting the actual work done, however, the financial side of the business needs equal attention.
As your business grows, one asset that can add value to how you operate and achieve your goals is continuous learning. Change is inevitable and continuous learning, for a business owner, is a strategic approach that can ensure your business survives in turbulent times and thrives in stable times.
You might have just started your trade business or have been in business for a while now, but one of the things that any business owner looks for is profit. Profit is why most people start their own businesses because it comes with early retirement or peace of mind knowing your income is secure.
In the first part of the Break-even series, we discussed what the break-even point is, how to calculate it and the 3 important elements you need to employ to achieve that position. As a quick recap, new businesses might not generate expected income in the short term but can make enough revenue which puts them in a position of not making a loss but not making a profit either. At this point the business can still survive, however, the most preferable outcome is that of making a profit as soon as possible.
Goal setting is more than just giving yourself a to-do list. You should set yourself a really meaningful long-term goal and then break it down into smaller achievable targets. Business owners should articulate this long term goal to the team through various mediums. Having a really well defined vision for the company provides clarity for all of your team members.