Cutting costs, not cutting corners

Benjamin Dyer of Powered Now talks about making smart use of your resources when running your trade business.

Many tradesmen don’t make as much money as they could by failing to control major costs, focusing on costs that don’t matter, not investing where they should and not organising their affairs well enough. But can things be done differently?

Materials on site

I have a personal “one hour rule” that states that everything you need to buy when on site takes at least an hour. You have to interrupt your work flow, get into the van, drive to the right outlet, park, go inside, source the materials, queue up, pay, then get back to the van and return to site. It takes an hour at best. That’s an hour that could be billed to a client.

Even worse, you may end up paying full retail price with no payment terms.

This all costs real money. So being really organised and making sure you carefully think through the job and get everything on site before you start, is key to keeping costs down.

Great people management

One manager was telling me that his firm works in all weathers, then later told me he would like to be able to track where staff are, as they had an unfortunate habit of leaving early if it was raining or snowing!

I don’t know if his staff love him, but that might be hard. In fact, if you can build loyalty to the company and recruit staff who take a pride in their job, you will save money. There will be less “resting” and less rework.

Obviously you need to try to recruit people who care in the first place. Then some of the ways to achieve better commitment are treating staff with respect, always praising in public and rebuking in private, seeking advice from staff and genuinely caring and showing flexibility if they have personal problems. This will increase their commitment to the company, which ultimately reduces your costs.

The tools of the trade

Ironically, sometimes the best way to save money is to spend it. This is particularly true when it comes to tools. Having the right quality tools can save time, produce better results while the tools will often last longer, actually costing less in the long term.

David Stewart of Stone Classics puts it this way: “Buy quality tools, they pay for themselves over and over again. I used to skimp on tools but it meant that I spent much more time on the job. Good tools turn into more profit.”

In this area also comes computer automation. There are now many apps that can help construction companies, including the Powered Now app from my own company. Lots of money is being invested in new solutions and you have the chance to benefit your business by saving time and improving efficiency.

Use lower cost labour where it makes sense

Not every job requires the same skills, and by employing an apprentice you can save money while helping the longer term future of the company. Matthew Stevenson of the fast growing company The Landscape Company puts it this way: “Using apprentices is a cost effective way to employ young people … the payroll saving compared with employing someone in the conventional way can be up to 50%, and the government also gives you a grant to help.”

Watching the pennies

My business partner, Chris Barling, tells me a story from the old days of the Greater London Council. Some of the council officers wanted to get a £3M commitment through a council meeting. They scheduled a discussion of a £3,000 spend for 20 minutes early on, then allowed five minutes to discuss the £3M spend later on in the evening. Unbelievably, it worked and they got the go ahead for £3M of expenditure.

We mustn’t behave as stupidly as this council, focusing on the trivial and ignoring the important. The place to worry about cost is the large items of expenditure. So start on the biggest bills. Negotiate hard and shop around. Let the trivial stuff do its own worrying.

Being organised

A lot of the ideas that we have talked about come from thinking about the business and being organised. In life, things happen for those who think and then exert the elbow grease after. I fear that this area is no different, so best of luck with your efforts.

 

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About the author:

Benjamin Dyer is co-founder and CEO of Powered Now, the mobile trade admin app that has one aim, typified by the company’s motto: “Paperwork, simplified.”

www.powerednow.com

 

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