How To Start (or Restart) Your Trade Business Successfully

Today, we’re diving into the essentials of starting your trade business successfully.  In this episode we’ll discuss the right way to approach your business from the beginning and how to start making money ASAP.

And … if you’ve been in business for a while, but feel like you need to hit the reset button, or maybe you just need to check in to see if you’re doing things the right way, then this episode will help you too.

Episode Highlights:

  • Starting Strong: Key strategies for building a profitable trade business from the ground up.
  • Resetting the Foundation: Tips for those needing to hit the reset button on their current business.
  • Financial Essentials: How to charge the right hourly rate to ensure profitability from day one.
  • Targeted Services: Finding your sweet spot in the market by focusing on profitable, high-demand services you love.
  • Technology Integration: Importance of adopting job management systems, financial platforms, and CRM systems to streamline operations and save time.
  • Delegation & Automation: Tips on outsourcing tasks and automating admin to balance on-the-tools work with business management.
  • Flexibility & Adaptation: Staying flexible and adapting to market changes to keep your business thriving in the long run.

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Andy
Today, we’re diving into the essentials of starting your trade business successfully. In this episode, we’ll discuss the right way to approach your business from the beginning and how to start making money ASAP.  

Ange
And if you’ve been in business for a while, but feel like you need to hit the reset button, or maybe you just need to check in to see if you’re doing things the right way, then this episode will help you too.

Andy
Sometimes we find ourselves in a situation where the business just, Is it going quite the way you’d planned? Maybe you’re off course and your profits aren’t quite meeting your expectations, or perhaps you’re feeling overwhelmed and out of control. That’s okay. It happens to the best of us. So today we’re going back to the beginning to help you with the right structure, strategies, and mindset needed to build a successful trade business. So you can turn things around straight away. 

Ange
We’ve actually been there ourselves veering off track, I mean. So we know exactly what it takes to get you back on track. 

Andy
Let’s get into the show and help you build a strong trade business from the ground up.  You’re listening to The Tradie Show. This is the podcast for trade business and contracting bosses like you who want to lead with confidence, make more profit, and create a better lifestyle.

Ange
We’re your hosts, Andy and Angela Smith, husband & wife team and co-founders of Lifestyle Tradie. Are you ready to have some fun? 

Andy
Hell yeah! 

Hey, Tradie!   I’m jumping in here to tell you about Buy4Tradies. It’s a buying group built by tradies for tradies like you who feel like you’re getting screwed on the prices you’re paying on materials, fuel, and other services. Electricians, plumbers, solar, aircon, whatever  trade you’re in, if rising expenses are hammering your bottom line right now, it’s time for all of us to fight back. Get access to exclusive deals and better pricing for your trade business today for free. Head to buy4tradies.com.au.  Firstly, I want to say a big welcome back to everyone. Today’s episode is the start of season 14 of The Tradie Show. 

Ange
Wow! Season 14 already. Can you believe we’ve been doing this for three years now and have more than half a million downloads? 

Andy
Yeah, it’s awesome, hey? And I love how we are reaching so many tradies all around the world and helping them run more profitable and streamlined businesses.

Ange
Yeah, well, that’s what our mission’s all about, right? To help tradies build a business they’re proud of and truthfully live a lifestyle they deserve. 

Andy
Yeah, it’s got to be a big hell  yeah to that.  

Ange
Absolutely. Couldn’t agree more. All right. Time to get into today’s episode. This is going to be super fun.

Andy
Let’s kick things off by saying the most obvious. You started your trade business to make money. Not just any money, net profit, plus to be able to take time off when you want and still make net profit. So let’s make sure you can do both of these things from the get go. 

Ange
Now, like we said in the intro, this episode is going to be great if you’re just starting out in business, but it’s also great if you’ve been in business for a while and you’ve suddenly realized, Hey, maybe I didn’t start my business out the right way. You can hit the reset button. 

Andy
Yeah, maybe you’re starting to see some red flags pop up in your business that are really starting to worry you and you know you probably need to go back to the drawing board to make sure the foundational stuff is solid. 

Ange
Yes, it’s totally okay to do that. In fact, I’d say you’re being super smart. If you want to build a sustainable and highly profitable business long term, it’s crucial to get this stuff right. 

Andy
Yeah, that’s so true, Ange. And racing to the top FAST with weak foundations will only see your business topple over at the slightest wind change. We’ve seen businesses who look so successful from the outside, but internally they were hemorrhaging, even facing bankruptcy. Simply because they didn’t focus on building the right foundations from the very start. 

Ange
Devastating to see it, right? 

Andy
Yeah, it is. And we actually wrote a book called Startup, Scale Up, Sell Up to provide you with the exact steps to build a profitable trade business from whatever stage you’re at by addressing the problems you’re facing, such as keeping up with technology, charging the right hourly rate, managing your cash flow, marketing, customer retention, and chasing debts.

Ange
Yeah, it’s a great book for whatever stage you’re at. You can actually get a free copy. Just check out the link in the show notes or just go to the website, lifestyletradie.com.au.

Andy
Okay. So the first part is a little too pronged. We want to ensure that you’re making money from the start, which means we need to make sure you are charging the right hourly rate. Then in addition to this, you need to be working with the right customers offering services that you know are profitable. This would be a planning phase if you’re new to business or a review phase if you’re established in your business. 

Ange
Okay, great. So let’s break that down and start with three key questions. Firstly, what services will you offer? What type of customers need these services? And what type of work do you want to do? 

Andy
Yeah, we’re going to think of this as finding the intersection between what makes money, what type of customers have a high demand for these services, and also what you enjoy. Like, imagine three overlapping circles, you know, one for services and you highlight those that are profitable, one for market segments that are in high demand for these services, and one for services you love doing. Where these three circles intersect, this is your sweet spot. 

Ange
It’s so important to be clear about this because although you might offer a plethora of services, you actually want to work out if you had to prioritize any service, which should it be? So for instance, you might love doing aircon, but if there’s not much demand in Antarctica, you might need to rethink your focus.

Andy
Ah, you’re funny, aren’t you? 

Ange
Yep. 

Andy
Now, once you have identified your core services of what you should do, it’s crucial to also define what you won’t do. 

Ange
Ah. I totally agree with this. It actually helps to avoid spreading yourself too thin and ensures you focus on what truly matters and what brings in the most value to the business.

Andy
So let’s give you an example of what that means in the real world. In our company, Dr. Drip, we switched from working with 85 percent of strata to 85 percent of residential. Specifically in affluent areas of Sydney, it took me around about 12 months to completely turn this around, but when we knew exactly who we wanted to work with and the type of work we wanted to do, it made the transition for the entire team that much easier to accept.

Ange
Right. But Andy, let’s be clear. That’s like a seriously significant change to any business, switching market segments that big. So you might not need to do anything quite this drastic. But it is important to highlight that although working with Strata was great for us, it was profitable, there was plenty of work and we actually loved it, for example, it was also important to be able to float the cash flow when they didn’t pay for months. 

Andy
You’re right. There’s plenty more I could share about the pros and cons of working with Strata. But that’s a story for another day. What I will add though, is being really clear about what you don’t want to do. I mean, in the early days we did offer a 24/7 emergency service and it was a requirement for the strata companies we worked with. But over time our loyal team who had mostly been with us for well over six years, started to have families and value their time over making money. We slowly started to drop our 24/7 emergency service.

Ange
Yeah, it’s true. It absolutely was a service that made us really good money, not to mention set up a great deal of profitable jobs for a Monday morning. But it became one of the offerings that we decided not to offer anymore to keep the team happy. 

Andy
And as a positive, it also meant there were less disruptions during the working week. For example, if one of the boys went out to a job at midnight and, say, worked until 4am, they were clearly not showing up the next day at 7am. Um, so it became really disruptive. 

Ange
Okay, so let’s circle back to the topic of planning or review. So we mentioned this was two pronged, one being to ensure you’re making money from the start, which means we needed to make sure you’re charging the right hourly rate. Then in addition to this, you need to be working with the right customers, offering services that you know are profitable. We’ve covered who you’re working with, by offering services you love. So let’s talk about the making money part. 

Andy
This is the part I love.  Okay, I can feel a rant coming on and I’ve said this before and I’ll say it again. It blows  my mind to see how many trade bosses out there are okay with breaking even in their business or for just the privilege to say, I run my own business. But if you’re not making profit, you may as well go and work for someone else. What are you doing? 

Ange
Yeah. Couldn’t agree more. And it’s a lot less stressful, right?

Andy
It definitely is. I don’t know why people put themselves through this pain of not making money. But if you’re adamant like I was to work for yourself and build your dream business, then let’s talk money, specifically pricing. It’s a common mistake to underprice your services, thinking it’ll attract more customers. The reality is it usually just leads to more work. And guess what? Less profit. 

Ange
Yes. Ouch. So, you need to get your hourly rate right. And no, don’t just copy what your old boss or tradie mate charges because there is a science to this. And no, it’s not a guessing game as you might think. It’s actually based on factual data.

Andy
Some businesses have more operating expenses than others and hence have no choice but to charge more money to simply cover costs and make a profit that they desire. 

Ange
Yeah, and that’s why no two companies are the same. 

Andy
But when you haven’t run the numbers, working out the right hourly rate for your business is anyone’s guess.

Ange
Agreed. There are plenty of resources out there to help with this, just like we take our members through our hourly rate calculator. You know what, it’s always so interesting to see how many guys are undercharging and they didn’t even know it. They are literally running a breakeven business. 

Andy
Or worse, they’re going backwards and they have been for years. I just don’t understand the cost of running a team, the cost of running a business. And they fall down this trap of just copying everyone around them just to keep work coming in the door. you’d need to stop it. 

Ange
Yeah. You know what? You actually need to be making profit ASAP. And you want to know you’re making profit because your numbers show it. 

Andy
And this is something that we help people through all the time. And I tell you, it is so rewarding helping tradies go from earning like zero profit or 5 percent profit and doubting themselves in business to making them make 20%, 30 percent and more profit almost immediately. Their enthusiasm for business certainly changes pretty quick, doesn’t it Ange? 

Ange
Yeah, sure. And when you do run your numbers through an hourly rate calculator, remember to include the leases on your vehicles or, you know, any other repayments you’re locked into because these things matter too.

Andy
Yeah, and don’t forget to include your salary and your super. You need to pay yourself a decent wage as well, everyone. And too many tradies, they underpay themselves thinking it’ll help the business. I get it. You say to yourself, let’s just start this way till the business earns better money. But I’ve seen it so many times before, years  go by and they still aren’t paying themselves what they deserved. 

Ange
Yes, I hear you. This is normally because they never worked out that hourly rate in the first place, including their wage and hence aren’t making enough profit to pay themselves. 

Andy
Well, I feel like we’re just come, complete full circle now.

Ange
Yeah. In short. Pay yourselves a good wage, run the numbers through the hourly rate calculator, including a profit margin, and charge that to your customers ASAP. 

Andy
Music to my ears, Ange, and then you know what you’re going to do? You’re going to make a profit. And that is why you started a business in the first place to run a good business, have time to do what you want and make good profit.  And so then you’ve got a growing amount of money in your bank account that is actually yours to keep. And you can use it when times get tough and trust me, they will. You’ll always need a cash buffer at times. Call it maybe three months of operation expenses to know you are financially comfortable.

Ange
Totally agree. And redo the hourly rate calculator every six months. Or if you have a major change, like maybe you’ve employed a new team member or you’re invested in a new piece of equipment because it could be marginal, but the hourly rate will change and hence you actually need to change that rate accordingly.

Andy
Okay, I’m going to change tack a bit. If we are talking about the right approach to business for a startup or for a reset for those currently in business. Then I would say you need to consider getting the right technology and make sure you adopt it the right way. 

Ange
Yes. So this is a tricky one because I understand many tradies would immediately say, but Andy, that doesn’t make me any money. My equipment makes me money. But guys, the technology that underpins your business is the efficiency piece. It saves time and time is money. 

Andy
Exactly my point. It is all about how you use it to its full potential. But let’s talk them through. There are three pieces of technology that a trade business needs to adopt. A good job management system. A financial platform. And a killer customer relationship management system. So a job management system that’s like AroFlo, ServiceM8, Fergus, or BuildExact. And that helps to coordinate work and stay connected between the office and the tradies out in the field. 

Ange
Well, not to mention a way to quote on site and collect money on completion of the job where you can. 

Andy
Right. And this needs to be connected to your financial platform like a zero so that you can see the right financial data on a regular basis. 

Ange
And the last one you mentioned was a CRM. This is a sales and marketing system for either a maintenance or a project based business. 

Andy
And this CRM system is non-negotiable. This is a powerful marketing machine that tradies have been missing for many, many years. 

Ange
I couldn’t agree more. It helps you track leads, follow up with customers and manage communication before, during, and after a job to encourage them to come back. So for the record, it’s not okay to tell me that you need work, but have been in business for six years with a kick ass database. Let’s get cracking to automate the communication to encourage them to come back using your CRM. 

Andy
Yeah, and the only catch here is you do need to know how to select the right one for your trade business and set it up correctly so it works for your business model. But basically it’s about how you can streamline and automate what you can do to offload your work and get more time back and make more money.  

Ange
I’d say every tradie’s ears are pricked up at this point. Time is definitely a sticking point, but if you use technology the way we teach, not only will you gain back time because there is more order in the business, the team will also love you because they have been set up to succeed.

Andy
No more sh*t show anymore.  

Ange
Right. So, respectfully, I’d say tradies just don’t know what they don’t know. 

Andy
True, but actually they would claim that they just don’t have time to set this stuff up. 

Ange
Ah, well, that’s ironic because it will save them time when they do. 

Andy
I know, but it’s difficult for a tradie to spend time doing something when they see no immediate return. And it’s usually not the biggest priority for them. 

Ange
But business would be significantly different if it was. 

Andy
And you’re preaching to the converted. And that’s the exact reason why when a new member comes to us, although we listen to their immediate challenges, and at times we address them head on as a starter, the reality is we often find we are asking them to work on something entirely different.

Ange
Ah, that’s because the problem they talk about is actually the outcome of something else they’ve not done to set their business up right. We’re in the business of helping them make profit and have their business last the length of time. 

Andy
I’m talking to a lot of trade business owners and they tell me their challenges and they say to me the staff won’t do this and this won’t happen here and I’m working all these hours at night doing quotes and invoicing and all this stuff and chasing debt and the reality is, they just haven’t set their business up right. So you need to get the right foundations. And this comes back to what we do at Lifestyle Tradie, we have a roadmap of exactly what to do to grow your business the right way. 

Ange
It’s a game changer actually. And talking about business structure, It’s important to make sure you’re set up the right way, like whether you’re set up as a sole trader, partnership, or company, and each has its own sets of advantages and disadvantages. For example, operating as a sole trader might be simpler, but it offers less protection for your personal assets compared to a company structure. 

Andy
This is definitely one for your accountant. And what we’ve seen in many tradies, they started as a sole trader, but now they are eight years into the business. The structure has never been reviewed yet their personal life is very different. They now have a family and bought property and these all need to be protected. So just make sure you speak to your accountant as each will have their own tax implications. 

Ange
Yes, which brings us to another point. You must stay flexible and be prepared to adapt. We literally lived by this in Dr. Drip and we still do this today. 

Andy
If you want to survive in business, you’ve got to be willing to pivot. I know, I know you’ve probably heard this word way too much during the pandemic and it’s getting a bit annoying. Pivot, pivot, pivot. But guess what guys? It is true. And during the pandemic, we saw some businesses thrive during that time, but we also saw business become stagnant and sadly a lot of them caved in and never recovered.

Ange
Yes. But just because the pandemic is behind us, don’t get complacent. There are always reasons you need to stay flexible. One of our Lifestyle Tradie members, Simon and Ali, started their business, The Heater Man, after coming to Australia from the UK. And after a while, they realized it was kinda hard to sell heat to Aussies in the middle of summer.

Andy
Ah, that is funny. But Simon has this flexible attitude in business, like me, and he’s a cracking guy. So while he kept his heater business roaring in the colder months, during those quieter, hotter months, he started another business, Roselle Plumbing, to keep the boys busy all year round. 

Ange
Ah, so smart. 

Andy
But then there’s been another threat to his business because of the phase out of gas in Australia. So Simon had to make sure he’s pivoting again and offering electric options for the heater man. And he’s training up his team to assure he looks after their future. But guess what? He’s also now added an Aircon arm to his business as well.

Ange
Ah, I just love the way he looks at business. Always on the front foot.

Andy
I also know another guy who owns a successful electrical business has morphed into being a specialist for electric cars and he’s installing charging units for Tesla and things like that. 

Ange
So, I guess the lesson here is to always be on the lookout for changing trends and how you benefit in your industry, offering solutions to your customers.

Andy
Exactly. The reality is if you stay still in business, you’re going backwards. You need to keep moving, keep learning and keep reinventing yourself. 

Ange
I couldn’t agree more. Keep moving, keep learning. Okay. I’d like to talk about another important thing if you’re a newbie to business or you’re pressing the reset button. So the breakdown of the flow of a job, I’m talking every step from how you attract customers, take calls, book a job, arrive on site, provide a quote, follow up on quotes, your terms and conditions, how you do the job, collect money, review the data, encourage customers to come back, and the list goes on. The idea is to perfect one job aiming for excellence so that you can streamline what and how it’s completed and then you can teach others.

Andy
Whoa, that is Ange, in a nutshell, so detailed, but I agree. It’s absolutely crucial that you’re doing this in your business. 

Ange
Yes. This is how you find time and hence squeeze money out of every job. Ultimately, this is how you see immediate results in profit. There is so much I could say about this topic. However, in short, streamline what you do with the aim of excellence. That way, we won’t scale chaos when you start taking on 10, 20, say 50 new jobs. 

Andy
Okay, the last thing I wanted to say before we get to our tradie dilemma of the day is this, I know business can be completely overwhelming sometimes. In fact, as the years have gone by, it can be utterly exhausting. And sometimes you can actually start to hate what you do on a day to day basis. But that’s usually because you’re stressed for time or money or both. When you know what to do and in what order, plus you have your business structure and system set up right. You start to get more time and money. And while they say money doesn’t buy happiness, life is sure to be a lot easier and more fun when you have it.

Ange
Couldn’t agree more. Plus the time to do what you want to do with it. So get your business model right. Set the foundations up so that your business will last the test of time. And if you need help along the way or you want to know more about our coaching and community, then reach out to us.  

Andy
It’s Tradie Dilemma time and this is our Q&A segment where you let us know what you’re having trouble with in your business and we can give you our best advice.

Ange
Okay, so today we have a question from Kane in WA and he writes, what’s the best way to balance time between working on the tools and managing the business? 

Andy
Great question, but I think the first thing we need to do is learn how to make money. And that’s not just making a turnover, that’s making profit. And we talk about it all the time. This all comes down with getting the foundations of your business right. Because there’s so many people doing it the wrong way. So it’s taking them double, triple, quadruple the amount of time that they should. You need to be outsourcing your bookkeeping. You need to be getting the right structure and then the right systems in place. As we talked about earlier, you need to streamline the flow of a job. There’s all these little things that make a dramatic difference for you and your business. But I just want to touch on this. Any business owner that I talk to that has no time, there’s one very clear and obvious thing that I see. They have their business model wrong and everyone, I’m talking to everyone in the business, is double and triple handling everything, which means it’s an absolute disaster in the office.

Ange
You’re so right, Andy. What we mainly need to do is streamline the flow of the job so that we’re not scaling up chaos. 

Andy
One other thing I want to add to that is you need to make sure you are at your best. I’m saying so many tradies, they’re burnt out, they’re tired, they’re exhausted. And when you start diving into their personal life and what they get up to at nighttime, where they get up to on the weekend with not eating the right food, maybe drinking too much alcohol, but just generally not taking care of themselves, it adds so much stress. And then that stress comes into the family life. And then that stress goes into business life. And that’s when the downward spiral actually starts. 

Ange
Yes. Couldn’t agree more with what you said, Andy. Thanks for writing in and sharing your dilemma Kane. Remember, if you have a question or dilemma in your business, then reach out to us and let us know what we can help you with. 

Andy
Subscribe to The Tradie Show, wherever you get your favorite podcasts. Rate and write us a review or for more information about Lifestyle Tradie, head to lifestyletradie.com.au.

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