Alison Warner, known as The Trades’ Coach is a bestselling author and Founder of Evolve and Grow Ltd, a business coaching firm that specialises in helping construction and trade businesses
In 2016, I began writing my book ‘Build and Grow’, which involved getting everything out of my head and down on paper, as to what I was doing to help my clients. You see, I kind of had the same problem as my clients, I was too busy and the only way I could scale, was if I took on other coaches and trained them in my methodology. But that was the problem I didn’t really have any methodology, or so I thought. When I stepped back and looked at the different things I was doing with clients, there were definite patterns and similarities. And so the BUILD system was born.
The BUILD system stands for:
- Business Planning
- Understanding Your Strengths
- Implementing Systems and Processes
- Love Your Customer
- Develop and Delegate
Essentially it covers the four elements of any business; Sales and Marketing, the Customer Experience, the Team and Finance/Systems. You see for any business to be successful, these four elements need to be kept in balance.
What we often see in Construction and Trade businesses is that the demand for their services outweighs their capability to deliver it. This can either be in the form of human resource or efficient systems, or both.
So how does the BUILD system actually help trades to weather any storm?
Well I am very fortunate to say that it is helping me and several of my clients do this right now, as the system teaches you how to manage the finances. Now this isn’t a quick fix, you would need to have been implementing the principles for some time to gain the benefits, but here are a few of the principles:
Have a system in place to manage your cash – this means paying yourself each month, having a separate account for tax set aside that you don’t touch, and a separate account for ‘savings’. This is rainy day money, even if it’s just a small amount you put aside each month, this is an essential habit to form. You should aim to have 3 months of working capital in this account i.e. What it costs to run your business each month (overheads) x 3. If this seems impossible, your overheads are too high or you’re not charging enough.
Have a financial forecast in place and regularly review –How much do you plan to turn over each month? How much do you expect to spend on materials and labour? How much profit do you expect to make? Most accounting software allows you to put this forecast into the system so you can report against it each month, giving you vital feedback on whether you are on course, or if anything needs to be adjusted.
Common size your expenses- Yes even some accountants have never come across this term or indeed put it into practice. But it’s really the only way that you can make your numbers meaningful. It is the practice of expressing your costs as a percentage of sales. As a rough guide materials, labour and overheads should be around 30% each, producing 10% net profit, and may be more depending on the size of the business .In essence, if you have a strong handle on your numbers and good practices in place to prepare for a rainy day, you will be in a much stronger position to get through a crisis. I know that this has made all the difference to me personally over recent weeks, and it is a practice my clients and I will continue.
For more tips and advice, please join our Trades and Builders Business Growth Facebook group or visit our website www.evolveandgrowcoaching.com
Alison Warner, Author of ‘How to go from Tradesperson to Managing Director in the Construction and Trade Industries’ https://amzn.to/2QIb467