Know your numbers to navigate peaks and troughs
Your decision to run a trade business hasn’t come risk free. As you well know, it’s taking on these risks that allows you to reap greater rewards. A true understanding of your business is the absolute key to managing peaks and troughs, and mitigating/weakening their impact. A true understanding of your business comes from analysing your financial statements.
The numbers in your financial statements will tell you when you’re making money and when you’re not. Over time, you’ll see patterns. These patterns enable you to plan. Planning for peaks and troughs will ensure that you’re making the most of your time whether you’re busy or not.
Here some ideas on planning;
Manage your money
No money in your business account = stunted business growth. No money in your personal account = STRESS! That said, it’s wise to put in place a contingency fund throughout busy times so that you have money reserved for the less busy times.
To do this, you’ll need to be strategic on how you spend your money.
When it comes to big purchasing decisions in your business, for example, purchasing new equipment, consider if the purchase is necessary. If it is, look at your purchasing options and their affordability.
Are you better purchasing using a loan? Are you better purchasing outright?
Your answer to these questions will be found in your financial statements. Making calculated decisions will ensure that you aren’t spending money unwisely. Unwise financial decisions can kick you in the butt down the track when you hit quiet times.
Manage your staff
Finding the perfect balance of staff to workload is essential but difficult with business peaks and troughs. Understanding the busy and quiet times will enable you to plan when to hire and what to do with staff when it’s quiet.
If you know that you have a busy time ahead, start looking for someone straight away. Allowing yourself time to find someone will mean that you are picking the “right fit” not just the first available. You’ll also have the time to train this person properly.
Staff motivation can seriously drop when there isn’t enough work to do. When employees have purpose, they work well. But, when there isn’t any work, their purpose vanishes.
To keep staff motivated in quiet times, you need to give them purpose by providing them with tasks to do. Troughs in workload are great times to review staff training, conduct stock take or encourage staff to take leave.
Manage your customers
Every interaction you have with customers is a chance to get more work, lessening the blow of your business troughs. Can you offer your customers a maintenance service all year round? For example, if you’re a landscaper you could provide some ongoing garden maintenance.
In addition to this, are there promotions you can do specifically in the quiet times to encourage customers to book in jobs?
Manage your time
During peak times it’s so common for important tasks to slip away incomplete because you simply don’t have the time to do anything but the work at hand. For this reason, quiet times can often be a blessing.
There are so many things you can do as a business owner during quiet times that will enhance your business success when things get busy again.
Here are some examples:
- Take a holiday, while you have the chance! You can’t run a successful busy when it feels like your energy levels are on empty
- Develop your business and marketing strategy
- Implement and learn new technologies
- Develop systems
When you understand the patterns of peaks and troughs in your trade business it gives you power. Instead of thinking about these times as negative, use them to enhance all areas of your business so that you’re on a path on continual improvement at a time when your business would otherwise feel stunted, stagnant and going nowhere.
- Join our Kick-Ass Tradies Facebook Group, for access to trade business specific conversations, tips and resources, plus a like-minded community of tradies.
- Book a 15-minute Game Plan Call with Andy, owner of Dr. DRiP plumbing and co-founder of Lifestyle Tradie, to clarify your priorities and get clear action steps.
Visit Next Level Tradie for our schedule of live events.