So the challenge that was sent this week was this “I run a business, and my goal for the last 12 months was to put on two extra trades, but I haven’t succeeded, what do you recommend I do about why I didn’t achieve this goal.” The problem is your focus is on the income not the result.
So, this is a common one I hear a lot, a lot of traders will have a goal of adding more trades to their team or hitting a certain turnover, whether it’s $500,000 or a million dollars. But you’re focusing on the wrong things, that million dollar turnover or two extra trades is a result that you’re going to get by focusing on profit.
Profitability (Result) NOT Turnover (Income)
What is the target profitability that you want in your business. From. here we can work out what you need to hit. So for instance, if you’re focusing on getting $100,000 profit in your business, and that might be 10% of your turnover. We can reverse engineer from your profit to work out what you actually need both from a turnover, but also from a number of trades to be able to deliver that.
Example of Focusing on the Result ($100,000 Profit)
If you want to make $100,000 profit in your business and you know that based on your margins (and you should all know your gross margins), you already know that you need a million dollar turnover business based on 10% profit.
Now to do a million dollar turnover business, you know that you’re gonna need a certain number of trades. Typically we work on $200 to $250,000 per qualified trade. So, you’re probably going to need at least four tradies to give you those numbers, depending on what your average job size is (and you’ll know that based on the numbers we work on as well).
If you need four guys and you already have two, you know you need two guys, but the two guys isn’t the goal. The two guys is part of the journey to get to the $100,000 profit, because that’s the ultimate goal. Focus on the result not on the income!
What the focus result you need in profit to give you the lifestyle that you want as a business owner?
Thank you so much for all of you who sent me a message with your challenges. I want to acknowledge you in that it’s not easy to admit that you don’t know all the answers, especially for us males, tradies in particular we really struggle to be vulnerable and say that we don’t know everything.
We are all Human
As business owners, if you’ve got the mindset that you think you know everything, or you think you should know everything, then you’re in a position that you’re going to fail because we don’t have all the answers.
We are all human beings if you think you know everything, then for one, you’re probably a dick, and I wouldn’t want to work with you. I want to work with people that are willing to explore and see what the possibilities are and work together to come up with the answers.
Business can be like a box of chocolates if you let it
I don’t have all the answers, but I have a damn sight more than most people in business, I’ve spent 25 years running businesses. I’ve gone through global financial crisis, times when the bank wanted to pull the rug out from underneath us to changes in market conditions when markets have suddenly disappeared.
Surround Yourself with Experts
Coming into COVID no-one had experienced that, how could you pick that or have the right answers as to what should be done.
By having someone alongside you, who’s got experience of similar things, that can help you and be a sounding board for you, you’re more likely to come up with solutions.
I’m currently down in Salisbury South, meeting up with a new electrical business client I’m always keen to talk to people this side of the city. If you’re a trade business based around Elizabeth, Salisbury area and you want to focus on the result not on income, I would love to have a chat and organise a free of charge strategy session with you. I can come to you, when I’m down this way and see if we’re a match to work together.
Enjoy the rest of your day guys, take care and don’t forget to check out some of my other content.