22 | DECEMBER 2018
News
Read online at www.proinstaller.co.uk
5 WAYS TO INVEST FOR GROWTH
WHILE CONTROLLING COSTS
Installer businesses can generate decent returns. However, not many of us would
say no to making a bit more. Benjamin Dyer of Powered Now examines 5 ideas
for growing your business while at the same time seeing cost kept in check.
Talking to people running
trade businesses is nearly always
enlightening. I must be honest and
admit that virtually all the ideas
in this article come from people
that run installer and other trade
companies. So, I hope that they
will forgive me for stealing their
ideas. Many bosses of successful
trade businesses have great tips to
share and I am glad to try and be
the conduit for some of them.
Win more profitable
quotes
You can grow your business in
two main ways – by winning more
work and by charging higher pric-
es. We will look at both.
Deciding on the price to quote
is difficult. Get your prices too low
and you can win lots of business,
but then it turns out to be unprof-
itable. Make your quotes too rich
and you don’t win enough. In the
worst case, where you are poor
at estimating and get your prices
both too high or too low, you only
win the unprofitable business.
This is why tracking costs
against your estimates over time
is a good discipline. If you do this
you can gradually improve the ac-
curacy of your quotes. One of my
relatives runs a garden landscap-
ing firm and he was telling me
that virtually all of his employees
used to run their own business-
es. They are good at the job, but
none of them were any good at
estimating, so they barely scraped
a living.
The other trap to watch out for
when doing fixed price quotations
is that you shouldn’t take any
unreasonable risks. Gas engineer
John McLaughlan has this advice:
“Suppose the customer wants a
boiler in an out-house, because
it’s not wanted in the kitchen. But
when I drill the wall, I find it is
not stable. I then must give them
the choice of either putting in a
new wall or moving the boiler
to the kitchen. That’s why on my
quotes I always say: ‘Subject to no
significant discoveries that could
not have reasonably been antici-
pated’. “
Time spent on making quota-
tions look professional is also a
good investment. A system can
help, which I talk about below.
But you can get many of the ben-
efits just by using a well-designed
logo and nice layout.
Finally, concerning quotes, my
company Powered Now’s research
has shown that one of the biggest
frustrations for homeowners is try-
ing to get quotes from installers.
As a result, if you respond quickly
to quotes you will be able to win
higher priced jobs. This is because
you will come across as more
professional and secondly you will
often be the only bidder.
Increase prices
Undercharging for work is the
single biggest problem for install-
ers running their own businesses
and can often lead to their demise.
Of course, I’m not suggesting that
you overcharge for bad work. But
if you do a great job, you should
receive a decent reward.
A quick clue is that if no-one
ever tells you “that’s expensive”,
then you are too cheap. It’s easy
to feel that cost is the only decider
but that is rarely the case. The
Dacia Sanderos costs under seven
thousand pounds new. So, every-
one should buy it, right? Wrong,
the vast majority of people buy
on value not just on price and the
cheapest doesn’t work for them.
Charging a reasonable amount
also means you can show some
flexibility. So small insignificant
changes can be absorbed into the
job leading to happier customers.
Customers never excuse short
cuts because you are the cheapest.
So, if that’s your approach you
often end up with low income and
angry customers which is a bad
combination.
Doing it the right way means
you will get more recommen-
dations, which is how 70% of
domestic work is won. Recom-
mendations in turn sustain higher
prices as you are much more
likely to be pitching for jobs with
no competition. It’s a virtuous
circle.
It’s easy to feel that the only
way to compete is on price but
quality nearly always trumps
price as a business approach.
Keep material
costs down
There is a simple word which
explains how to keep materi-
al costs down and that word is
planning. When jobs have been
properly planned you save costs
in several ways. This includes
avoiding the team sitting around
waiting. Materials are always to
hand and wastage is minimised.
Doing all of your buying in ad-
vance will usually mean that you
can get keener prices and credit
from your trade account means
improved cashflow. Then there is
the saving of time and fuel. That
comes from not needing to drive
to the nearest builder’s merchant
to pick up emergency supplies.
Finally, try not to leave anything
valuable or useful at the site. If
I had a ladder for every ladder
that had been left at my house,
I would have …. a lot of useful
different types of ladders, which
I do! Why people have left them
I really don’t know. Even when
we have reminded them, they still
didn’t bother to pick them up.
Beats me.
Focus on the
biggest costs
All costs reduce your profits.
The big trap that can be made is
to pay too much attention to the
little costs and not enough to the
big ones. To avoid this, look at
your end of year accounts and
see where most of the money is
going.
The biggest costs could be your
vans, hire costs, insurance or even
overtime. You should start your
cost savings where the biggest