Times are tough, and although you’re probably sick of hearing it, the reality is that times really are tough. With so many different weather events going on and an unpredictable economy, it makes sense that you want to keep your small business profitable. But how can you do that?
One of the first and most obvious ways is to cut your costs, but it’s not always easy. To help you out, we’ve put together some tips for cutting down costs in your trade business.
Make changes to your quotes
Often when you’re creating and delivering quotes to potential clients, they have a validity period of 30 days or more. The thing is, in that time the price of supplies and other services you might need will likely have fluctuated. So a month later when the client accepts the quote, you might actually be missing out on any kind of profit.
To try to keep your quotes as up to date as possible, change the validity period of them to 14 days, or even 7 days so you’re able to change them and account for any new costs quickly.
Ensure price lists are up to date
Is the price list you have on hand from your suppliers still correct? It might pay to check in with all of your suppliers on a regular basis to make sure their prices haven’t changed. Otherwise, you’ll be creating quotes and invoicing based on pricing that might not be accurate, leaving you to cover the difference.
A good supplier relationship is key, so it might also be worth visiting them every once in a while to build rapport – that way, they’ll be more likely to let you know ASAP should there be any price increases from their end.
Pay for your materials upfront
Late payments can mean blocked cash flow, and if you’ve already done the job, it can be frustrating to then try to pay off your debts with cash you don’t really have. A quick fix for this that’s becoming more common in trade businesses is to pay for your materials at the time you order them.
Yes, it means you need to front up the cash straight away, but it actually helps spread the payments out over a longer time period and means you won’t be dealing with massive debt all at once upon completion.
Communicate any price increases
This isn’t necessarily a cost-cutting practice, but there will come a time when you’ll need to increase your prices. Although it can be awkward to let clients know there’s an increase, you need to be upfront and honest and put the health of your business first.
Communicate your price increases clearly and concisely – you don’t need to explain your reasoning if you don’t want to as most people should be aware that inflation is high and businesses are struggling. If you want to soften the blow, you could express how much you value the support of your client and make it about looking after your team or yourself so you can provide clients with the best service.
If you’re in need of some advice, don’t hesitate to reach out. Our financial advice team is here to help – we want to see your business thrive.