As a business owner, it’s never been more important to have a good grasp on your finances.

For many businesses, priorities have changed, customer behaviors have mutated and revenue streams have had to evolve and pivot in order to maintain a profitable business model.

To track, monitor and drive your financial performance in this updated business environment, it’s increasingly important to have a handle on your key financial reports and metrics.

Getting to grips with your financial reports

Whereas in the past, extra cash in the business may have been seen as a surplus that needed to be spent on something, recent years have shown us that having reserves is vitally important for the survival and long-term health of your business.

To truly be in control of this cash, it’s vital that you can dip into your accounts, financial reports and dashboards and ‘see the genuine story’ behind your financial position.

Here are the key reports to focus on:

• • • Budget – your budget is the financial plan that’s tied to your strategic plan. In essence, the budget is your approximation of the money it will take to attain your key strategic goals, and the revenue (income) and profits you hope to make during this period. It’s a benchmark you can use to measure your actuals (historic numbers) against, allowing you to see the variances, gaps and missed targets over a given period.
    • Cashflow Statement – a cashflow statement shows the flow of money into and out of your business. Understanding these cash inflows and outflows in detail allows you to manage this ongoing process, allowing you to aim for a ‘positive cashflow position’ – where inflows outweigh outflows. In this ideal positive scenario, you have enough liquid cash in the business to cover your costs, fund your operations and generate a profit.
    • Cashflow Forecast – forecasting allows you to take your historic cash numbers and project them forward in time. As such, you can see where the cashflow holes may appear weeks, or even months, in advance – and that gives you time to take action, whether it’s increasing your income stream, reducing your underlying costs, chasing up unpaid invoices (aged debt) or going to lenders for additional funding.
    • Balance Sheet – the balance sheet shows you the company’s assets, liabilities and equity at a given point in time. In a nutshell, it’s a snapshot of what the business owns (your assets), what you owe to other people (your liabilities) and what money and profits you currently have invested in the company (your equity). The balance sheet is useful for seeing what stock and equipment the business owns, how much debt (liabilities) you’ve worked up and what the company is actually worth – all incredibly useful information to have at your fingertips when making big business decisions.
    • Profit & Loss – your profit and loss report (P&L) gives you an overview of the company’s revenues, costs and expenses over a given historic period of time. While the balance sheet is a snapshot, your P&L is more like a moving video. It shows you how your finances are progressing by demonstrating how revenue is coming in and costs/expenses are going out (rather than cash coming in and going out, as you see in your cashflow statement and cashflow forecasts).

Talk to us about accounting and financial reporting for your business

We’ll run you through the key reports in your accounting software, and can help you track performance, take action and position your company for growth.

The following content was originally published by BOMA. We have updated some of this article for our readers.

The purpose of a business is to make money, and that means you need to know the difference between profit and cash flow.

Net profit is what you have left after you deduct all your business expenses from all your revenue. You can improve net profit only by changing the things that affect revenue and expenses.

For example, if:

• • • You renegotiate with your suppliers, you may get stock cheaper, or carry less inventory
    • Your staff engage with customers better, you can learn more about what they do and don’t like – and get more business
    • You can roster staff differently, you may be able to run your business more efficiently.

Cash flow comes from various sources. However, it also covers operating expenses, taxes, equipment purchases, repayments, distribution, and so on.

Note that a profitable business does not always have good cash flow. And a business with good cash flow is not always profitable. For example, you can have good cash flow, and loss-making expenses.

To work out how fast you can grow your business, look at your projected cash flow. We can advise you on this.

Keeping cash crowned as King

Your business can’t survive without cash.

The following six takeaways are essential for business success:

1. Protect your cash position, by knowing what it is. Build a cash flow statement and always keep it up-to-date. If you foresee a shortfall, start at once to fix it.
2. Create a cash buffer as an insurance against unexpected difficulties.
3. Protect your cash position against revenue shocks, by maintaining a balance equivalent to at least two months of operating expenses.
4. Be realistic with revenue expectations. Take action now if it looks like sales are not going to get you to breakeven.
5. Credit checking up front will reduce the risk of customer non-payment. Make sure you follow up with clear payment terms agreed in writing. Communicate regularly with customers and automate where possible.
6. Every dollar you spend reduces cash reserves. The best way to protect your cash is to create a budget for the spend you know you need, and stick to it.

Looking to improve cash flow? Make a time to talk to us. We’re here to help.

The following content was originally published by Tradefy. We have updated some of this article for our readers.

For your business to make money, you need to generate revenue.

You produce revenue through your usual business activity, by making sales, getting your invoices paid, or taking cash from paying customers. So, the better you are at selling your products/services and bringing money into the business, the higher your revenue levels will be.

But what actually drives these revenue levels? And how do you get in control of these drivers?

Knowing where your cash is coming from is more crucial than ever

As a trading company, you face the multiple challenges of a global recession, changed consumer buying and higher inflation, all this impacts trading, markets and buying expectations. The better you can understand the nature of your revenue and its drivers, the more you can flex, manage and control your ability to generate this income.

This helps your medium to long-term strategic thinking, and your decision-making, allowing you to be confident that you’re focusing on the business areas that deliver maximum revenue.

Import areas to consider will include:

• • • Revenue channels – where does your revenue actually come from? Do you create income from online sales and ecommerce, through retail sales in bricks and mortar stores, or through wholesales to other businesses? You may focus on just one of these channels, or it could be that you use a mixture of two, three or more.
    • Revenue streams – your total revenue will be made up of a number of different ‘streams’ So, you might be a coffee shop, whose revenue streams include coffee sales, cake and pastry sales and lunch sales. Knowing which revenue streams you rely on, which are most productive and what return they are delivering allows you to make decisions. If 80% of your income comes from 20% of your products, perhaps you need to tighten up your product range and ditch some of the poor sellers. If you’re selling more services to one particular industry, perhaps you should focus more marketing in this specific niche, or downscale your sales activity in less profitable niches.
    • Product/service split – Do you know which products/services are the most profitable in the business? Which products/services have been resilient to market changes (giving you some revenue stability) and which have adapted well to change? The more you can dive into your metrics and find the most productive and adaptable products and services, the greater your ability is to provide constant and evolving revenue for the business.
    • Value vs volume – Is your revenue based on selling a high volume of products/services at low margin, or low volume at a high margin? Based on this, can you move your margin down to create a more attractive price point (and more value for customers)? Or are their ways to push volume up, shifting more units and boosting total revenue? By diversifying into new channels, new streams or new products/services you can aim to balance value and volume to create brand new sales – and higher revenue levels.

Talk to us about exploring your revenue drivers

If you want to boost revenue and increase your overall profitability, come and talk to us. We’ll review the numbers in your business, help you to understand your revenue drivers and will give you proactive advice on enhancing your total revenue as a company.

Get in touch to kickstart your revenue generation.

The following content was originally published by BOMA. We have updated some of this article for our readers.

Word of mouth is an extremely effective form of marketing and online reviews super-charge their already powerful effect.

Research shows that reviews have a very important role to play in customers’ purchasing decisions. According to Brightlocal 91% of people aged 18-34 trust online reviews as much as personal recommendations, and 93% of consumers admit that online reviews helped influence their decisions.

Here’s your guide to scoring five-star reviews every day.

1. How to get reviews

The best way to get reviews is to simply ask. Most customers who enjoyed a positive experience won’t proactively submit a review — you’ll have to request one. Just be polite about it.

If customers are vocally happy with your work, you can ask them to leave a review right there on the job. You’ll find that people might be more willing to get a one-minute task out of the way when you’re with them, rather than complete a review days (or even weeks) later. Just make sure to follow up if a customer says they will, but nothing shows up.

Here are some other things to be mindful of when asking for reviews:

Do:

• • • Add links to your review profiles on your website, so people can find them easily.
    • Make requesting customer reviews part of your normal business processes when closing off a job.
    • Mention your review platforms on business cards and flyers.
    • Follow up on jobs with emails requesting reviews (add links here too).
    • Offer customers a choice, by signing up to different review platforms.

Don’t:

• • • Hassle customers too hard for reviews. If they don’t want to offer feedback, leave it at that. Don’t ask more than twice.
    • Write fake reviews or pay third parties to leave positive reviews. Fake reviews are often easy to spot and you don’t need it coming back to bite you.
    • Source too many reviews all at once. This could trigger some review site spam filters and lead to reviews being deleted.

2. How to handle bad reviews

Misunderstandings happen, but there’s no way around it — now and then bad reviews will come your way. Rather than get all hot under the collar, take it as an opportunity to improve your service. If the feedback is constructive, make some changes, respond to the review, thank them, and let them know what you’ve done to resolve the situation.

If the review feels wholly unfair, still respond (in a controlled manner) and contact the customer offline to hear more about why they’re upset. Handled well, bad reviews can show that you’re transparent and responsive to customers. Fronting up and trying to make things right can build more trust than never making a mistake in the first place.

Monitor your reviews

Customers have come to expect responses to their online reviews. This is where services like Google Alerts can help. Sign up and you’ll be notified every time your trades business is mentioned online. This will help you stay on top of the chatter and proactively manage your online reputation.

3. Online reviews and SEO

Online reviews have been shown to heavily impact purchasing decisions, but you need lots of them to make an impact. A handful of four or five-star reviews might not cut it. Focus on getting ratings and reviews from every job you do. Eventually, your customer review count will hit the hundreds mark, showing customers that you’re popular, reliable and consistent.

Reviews are an effective way to improve your SEO by associating your trade business with popular search keywords and phrases. For example, reviews that include who you are and what you do, e.g. ‘Plumber in Sydney’ and ‘Fixed my blocked toilet in London’, will increase your online credibility and raise your local ranking. That means more eyeballs, more clicks on your website — and more jobs.

4. Review platforms

As tradespeople offer local services, it pays to focus on localised sites. Here are our top picks for highly effective review sites for trade businesses, backed with local relevance.

Google My Business (GMB)
Creating a Google My Business listing is the best way to reach potential customers in your immediate vicinity. It helps Google users in your local area find and contact you through Google Search or Google Maps. The listing gives your customers additional insights too, like what your busiest time of day is, as well as review ratings.

• • • Add as much information as you can, especially:
    • Business name & logo
    • Physical address
    • Phone number
    • Business type
    • Hours of operation
    • Website link
    • Photos

Facebook

Facebook is an ‘all-in-one’ resource for finding customers. When set up correctly, it can be used as an alternative to a website where people can message you directly and book appointments. The extra cool thing about Facebook is that when users leave a positive review, their friends will probably see it — exposing your trade business to a new network of potential customers.

Learn how to use Facebook for your trade business.

Online small business directories
Online small business directories can work wonders for your trade business. Customers who use them are actively looking for someone to hire. They generally categorize by trade and location, so to win business in your local area, you need to demonstrate why you’re the best. Use your reviews to do this.

• • Online directories for trade businesses in the USA.
  • Online directories for trade businesses in the UK.
  • Online directories for trade businesses in Australia.
  • Online directories for trade businesses in New Zealand.

Yelp
Yelp is another popular internet search and review service. ‘Yelpers’ rate their experiences on a five-star scale and are offered the option of leaving text-based feedback. Profiles are free to set up, and you can respond to any review you receive. When you set up a profile, be sure to request a “Find Us On Yelp” or “People Love Us On Yelp” sticker to stick on your car or van.

5. Streamline reviews with software

Getting customers to write reviews without asking isn’t easy, but with a little encouragement, they’re all too happy to shout out about your services. Cue modern software like AskNicely. Simply sign up to the service and AskNicely will automatically send basic review emails to your customers once jobs are complete.

If the feedback is above average, it’ll automatically prompt them to complete a customer review on a review platform of their choice. For low scores, the software follows up with a complaint mitigation email designed to find out where the experience went wrong. If you’re on a budget, Delighted offers almost the same service, at a cheaper price point.

6. Managing your online presence

Whenever you receive a great review, go through your list of online platforms and consider where it could help to generate brand awareness or enhance your online credibility. Take an excerpt from the review and add it as a testimonial to your website or share the quote as a social media post on Facebook or Instagram.

In the same way that Google loves fresh web content, customers respond far better to recent reviews. If your last review was over 12 months ago, people may trust you less.

7. Reviews pay back in spades

Online review ecosystems are immensely important. They’re one of many online marketing tools you can use to build a successful, long-standing trade business. Establishing a glowing online presence doesn’t happen overnight, but with a little time, commitment and proactivity, you can turn your customer reviews into key sources of leads to help you win more work.

For more tips and tricks on how you can create a stand-out online presence and get more work for your trade business, download our Marketing Plan for Tradespeople.

The following content was originally published by Tradify. We have updated some of this article for our readers.

Strong client-contractor relationships are a must for successful tradespeople.

They help to generate repeat business, word of mouth, and great reviews — everything you need to keep a steady stream of jobs headed your way.

1. Honesty is the best policy

Any strong relationship starts with honesty and trust. Never mislead or lie to your clients, and if you need to deliver bad news, be upfront and transparent about the issue. Your clients will value your honesty and can help you to find a resolution if they know the truth from the get-go.

It’s a good idea to be clear with your clients about what a typical working day looks like for you. Start and finish times, potential noise levels, and the experience level of your staff are good places to start.

Take time to discuss your client’s ground rules if they have any. If you think that these rules are unrealistic, or you may find it hard to follow them, let them know early on so that you can come to a compromise together.

2. Provide details

While you may be an expert in your field, it’s likely that your client isn’t. Take the time to break down the details of the job and provide further explanation if needed. It’s always better to spend a bit more time going over the facts of the job, than to re-do a job because your client wasn’t clear on what you’d agreed on.

It’s a good idea to confirm any important details that you and the client have agreed on in writing. This way, if there’s any confusion about what was said, you’ve got something to refer to and send back to the client.

• • • Take time to explain how you will protect the property you’re working on, such as:
    • How you will protect items of furniture and surfaces.
    • Whether you will wear shoe coverings.
    • If any household items should be moved during the project.
    • Closing and locking external doors upon entering and leaving the property.

This will go a long way in showing your client that you care about their property. It may seem simple, but it’s a small detail that many tradespeople miss, so it’s a great way to stand out from the crowd.

3. Enforce solid contracts

A solid contract that details the roles and responsibilities of everyone involved in a project forms the basis of a good working relationship. One of the essential things to consider when you first set up a trade business is to draft contract agreements for your work.

A solid contract should include:

• • • Detailed scope of work: expectations, time-frames, and list of tasks.
    • The tradesperson’s responsibilities: things like tool stowage and clearing up after work is completed at the end of the day.
    • The client’s responsibilities: does your client need to provide access to their property at specific times? Do certain facilities need to be made available? Whose responsibility is it to move furniture before the project starts?
    • The total, final price of the work: have you provided a quote and does the client agree with your pricing?
    • Compliance requirements: planning, building regulations, party walls, utility companies.
    • Schedule of payments: will the materials be paid for in advance? How and when will the final bill be paid? Do you take an initial deposit before project commencement? Agree on how much is to be paid and when, and lay it out clearly in the contract.
    • Disputes: explain how disputes are typically resolved.

Even if you’re just completing a small job for a homeowner, a written contract sets out the boundaries for the project and can diffuse any potential disputes later on down the line. Make sure you spend time going through the contract with the client — that way you can make adaptations as needed and ensure that everyone’s satisfied with what’s being agreed upon.

4. Work together

Working together with your client on a project is beneficial for both parties. The key thing here is to understand precisely what your client’s needs are so that you can deliver them to the best of your ability. Ask your client plenty of questions and know what their project pain points are. Having upfront conversations like this will avoid problems later down the line and demonstrate your trustworthiness.

To make sure that you and your client are on the same page, create a list of questions to ask your client to manage expectations. Some general ideas for questions include:

• • • Can you tell me about your budget for this project?
    • What would be the best results you would like to see?
    • Are you looking for an estimate or a fixed price for this project?
    • What worries you the most about this project?
    • What are your expectations regarding communication and progress updates?
    • What areas of your home can we not touch or enter?
    • When are you looking to start this project and when is your ideal completion date?
    • Are there any key milestones, important dates, or time constraints to be aware of?
    • Are there any other contractors involved with this project?

5. Encourage communication 

Regular communication throughout the duration of a project delivers reassurance to your clients. Establish who your main point of contact is and work out their communication style. While some clients may want to be kept up-to-date with everything going on on-site, others may be happy for you to do your thing and simply make contact when certain jobs have been completed.

Miscommunications can be the source of many disputes. What starts as a simple misunderstanding can escalate to bigger problems down the line and have the potential to damage your reputation.

Always keep the path of communication open and encourage questions from your clients. Willingness to demonstrate the project’s progress offers peace of mind and forges strong client-contractor relationships.

6. Embrace technology

Using the right technology can boost your client-contractor relationships in many ways. Chances are, like most busy tradespeople, you can’t find enough hours in the day to deal with all the other aspects of your business like finances and payments.

Some benefits of using technology include:

• • • Making communication simpler.
    • Planning jobs quickly.
    • Simplifying the payment process.
    • Raising invoices with ease.
    • Providing accurate estimates.
    • Creating project visuals.
    • Securing future jobs

Modern tech can be confusing, but it’s important that you don’t find yourself falling behind. Explore whether job management software like Tradify, which handles enquiries, quoting, and invoicing, is suitable for your business. Tracking your jobs with pen and paper might be fine at the start of project conversations, but at some point, you’ll need to keep things a lot more organised — clients will expect this of you — it’ll help to deliver the project on budget, on time, and to their satisfaction.

7. Client-contractor relationships that last

Without heading down the live chat software route, there are other ways to provide exceptional customer service and stay ahead of your competitors.

Building strong client-contractor relationships is not hard to achieve with the right mindset. By encouraging two-way conversations where possible, and being honest about deadlines and project progress, you’ll foster a transparent partnership with your clients to create an excellent service.

The following content was originally published by Tradify. We have updated some of this article for our readers.