DO YOU WORRY ABOUT PAYING WAGES, SUPPLIERS & TAXES?
IS YOUR BANK ACCOUNT SEEING FAR LESS PROFIT THAN YOU EXPECTED?
ARE YOU CONSTANTLY STRUGGLING TO GET PAID WHAT YOU'RE OWED?
How many trade business owners out there do you think are being kept awake at night thinking these exact same thoughts? How many do you think are sick of the ‘up and down’ cycles of money coming in and out? Not knowing what to do or who to turn to for help?
From the outside, many trade business owners look and seem like they have everything sorted; plenty of jobs on the go, a decent turnover, maybe even some staff, or some specialist subcontractors on various jobs, but come weeks end, they find themselves asking the same question over and over again: how am I going to pay all these bills? I don’t have enough cash in the bank?
The problem? Financial management.
When it comes to managing finances, paying bills, debt collecting, etc. a lot of trade business owners find themselves frustrated. Week in and week out they try to guess who will pay their invoices on time so they can pay their staff, subcontractors, bills, and (maybe, just maybe) have some money left over for them to take home as well.
Working 60+ hours a week and still struggling with cash is a tough gig, but most trade business owners like to say things like “it’s fine, I was talking to Josh, and he is going through the same thing, it’ll work itself out”, “It’s just the way it is in this industry” or “The market is just in a slump right now”.
This whole "she’ll be right" attitude is strong, even when they are struggling. We aren't denying this positive mentality plays a large role in their ability to keep their business going, but there comes a point when it's time to reach out and ask for help.
Too often, we see trade business owners near retirement with very little money to show for their efforts. Their business has provided them with a job and income all those years, but it has never provided them with real profit.
How many do you think dread the meetings with their accountant come tax time? They get told “Congratulations, you’ve made a profit”, leaving them wondering "How?! I don’t have that amount of money in the bank and I still have a stack of bills to be paid!".
Then for another year, they thank the accountant, pay their bill, and walk out the door having no idea what happened to that profit the accountant was talking about. How do we solve this problem? How do you guarantee that you’ll make real profit AND understand your businesses cash position at all times?
The answer... strong financial management.
4 CRITICAL ELEMENTS TO EARNING MORE, KEEPING MORE & MASTERING YOUR MONEY
BUT WHAT DO WE KNOW ABOUT FINANCIAL MANAGEMENT?
SOME QUESTIONS TO ASK YOURSELF...
CASH FLOW MANAGEMENT
Are you actively tracking & monitoring the actual cash flow in your business against forecasted figures? Do you understand the critical importance of regularly keeping tabs on the cash flow in your business? Did you know cash flow is the #1 reason for trade businesses going under?
FINANCIAL DASHBOARD
Do you clearly understand how to read and leverage your financial dashboard (i.e. profit & loss, cashflow statement and balance sheet) to give you detailed insights into the financial performance of your business? Are your chart of accounts setup to accurately reflect how you do business?
KEY PERFORMANCE INDICATORS
Do you have a set of key performance indicators (i.e. monthly sales, conversion rate, profitability, etc.) that you actively track and leverage to drive financial performance in your business? Do you know your critical financial numbers & clearly understand how they affect your business?
FINANCIAL TEAM
Do you have a strong financial team behind you or are you trying to manage your tax, bookkeeping, accounts, etc. on top of everything else? Is your current tax accountant and/or bookkeeper doing a good job? Are your finances completely in order, up-to-date and accurate?
ACCOUNTS RECEIVABLE
Do you have a foolproof and written system including scripts and letters for bringing in the cash and ensuring you get paid for your work? Have you got the right Terms of Trade clearly outlined and are you getting them signed by your clients? Or are you constantly struggling to get paid what you're owed?
INCORPORATING SOFTWARE
Do you actively use and maintain an accounting system like Xero, QuickBooks, or MYOB to drive financial performance in your business? Or do you just using it for BAS and tax? Are you using the reporting functions on these platforms to get timely and accurate reports of your finances?
"YEAH, I KNOW I NEED TO KNOW MY NUMBERS, BUT HOW THE HELL DO I DO THAT?!"
Running a trade business can be different to other businesses when it comes to financial management. Are there similarities? Of course. But there are factors at play in a trade business that other industries never have to consider.... And in some regard, it's a completely different ball game.
The problem is, it can be near impossible to find specific and relevant, let alone actionable financial information. Our goal is to destroy the stigma around financial management!
You DON'T need an accounting degree and you DON'T need to be a numbers or maths genius. All you need is relentless focus on a couple of key areas to drive financial performance in your business.
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