If you’re running a trade or construction business turning over one million dollars a year, chances are you’re missing out on some very important information in your business that is costing you BIG time and actually allowing your competitors to outperform and even worse, out earn you… every single year.
But if you stick around, in this article I’m going to break down exactly what your business could be missing, why it’s allowing your competitors to out earn you, and of course… how you can go about taking back control and changing this narrative.
Let’s get stuck in.
The Industry Problem.
Trade and construction businesses have some of the highest insolvency rates in the entire country, in fact, the insolvency rates for the trade and construction industry as a whole, are 5 x higher than all other industries combined…
Which is just mental, right?
And this isn’t just affecting the little guys either… our market research also tells us that every five years, 1 in 3 trade businesses turning over one million dollars a year closes its doors for good.
Now, why is that?
Is it market conditions? Is it an increasingly competitive landscape? Is it because of the economy? Or is it because of something entirely different…
I believe the primary reason behind these terrifying statistics is the lack of insight, clear information, and strategic advice available for trade business owners.
You see, trade business owners do not talk to each other or share information freely enough.
Sure, you meet, socialise, make jokes, and tell stories but rarely do you dive into detail about how you actually run your business.
You don’t talk about the mistakes that cost profits, missed deadlines, or really what business strategies that get you real results, because there is an unspoken code among trade and construction business owners…
You learn the ropes of the industry; you figure out essential information not taught in classes on the business side of things through personal experience and hardship.
And once gained, that information is yours. You've paid for it. You've earned it. It's your personal property.
Now you let others earn and learn it the exact same way.
And because of this attitude, the industry to re-inventing the wheel every single day.
A Rising Tide Lifts All Boats.
But I’m a big believer in the idea that a rising tide lifts all boats (which is why we post content every day and training videos every single week just straight up telling you how to get better results in your business), because I do not believe that there is enough valuable advice and training available for trade and construction business owners and this is hurting the industry as a whole.
Now because of this, naturally, a lot of business owners look to their accountant for help and advice to overcome this…
But here are the facts.
According to Xero, which is one of the world’s leading accounting software platforms, on a global scale only 52% of accounting firms want to offer advisory services, and even more upsettingly, only 11% actually do.
Now to what extent… I’m not sure… but this is a big problem.
You see, despite there being many great accountants, the traditional accounting model is outdated and sadly, what the data is telling us is that most firms are only really interested in filing tax returns and speaking once or twice a year… NOT providing the value that business owners turning over $1M really need.
Because if you’re running a trade business turning over $1M a year, what you really need is a team working behind the scenes proactively to help you run a better business and actually earn more money NOW, rather than meeting come tax time to simply just outline ‘how you went’ when it’s already too late to do anything about it.
Your accounting should be far more than just a tax return at the end of the year!
Proactive VS Reactive.
This is about proactive advisory over a traditional reactive accounting model.
A lot of companies don’t have their bookkeeping handled by professionals, they aren’t confident in their tax situation, they don’t have the right structure to protect their personal and business assets, they aren’t tracking and running their business off the right numbers and improving month on month…
And this is because they either don’t have the time, they don’t know what to do, or they don’t have the right team in place to just handle it all for them so they don’t have too…
But that brings me to the next problem.
For many business owners, accounting is looked at as an expense, and not as a catalyst to achieve greater success. But this is where people are going wrong…
If you don’t have the right team helping you handle everything financial and advising you on how to improve you’re stuck in first gear and you’re only holding your business back when your numbers could be pushing you forward.
So, you need to make sure that you have the following six elements set in place in your trade business:
The Six Key Financial Elements.
FIRST, the right structure:
Having the right structure of how your business is set up makes all the difference in keeping your personal/businesses assets and wealth protected. If the structure isn’t right, ONE job or ONE employee could be your undoing.
SECOND, the right software:
You need the right accounting, job management, receipt management, and payroll software suited specifically to your business and your specific circumstances. Because if you don’t have these systems in your business, chances are you’re falling behind.
THIRD, an expert bookkeeper to run it all:
This means a qualified and experienced professional taking care of your bookkeeping keeping your books immaculate every single week, and also, holding you and your team accountable and making sure you’re following the correct financial systems and processes to streamline your financials, give you the best information to run your business, and keep yourself out of hot water with the ATO.
FOURTH, the right tax strategy:
Paying tax is a good thing, it means your business is profitable and you’re making money. Paying too much tax, however, isn’t… so you want to make sure you’re getting the best advice to structure your financials the smart way to keep your tax bill as low as legally possible.
FIFTH, monthly performance insights and advisory:
Right from the outset… you should have concrete financial targets and KPI’s set based off the specific amount of money you want to personally earn in any given year AND with a game plan in place on how you’re going to achieve it. Then what you need happening is a monthly feedback loop that is giving you very clear insights into how you’re performing against these targets WITH strategic advice on how to do better in the following month.
SIXTH, quarterly game plans:
As an extension on my last point… you also need to be sitting down either in person or over zoom and having a business and financial expert run you through a complete profit and cash game plan based off your financials every quarter. This is where you get strategic advice on what to focus on specifically in your business every single quarter to skyrocket your profit and cash and get much greater returns from your business.
These are six key elements that must be in a trade business if you’re looking for exponential returns.
So, if you do not have this information and advice available at your fingertips… and if you’re not getting this level of service in your business and having this stuff handled for you by seasoned professionals… then I promise you… it is costing you BIG time… and the businesses around you that do have this in place will consistently outperform and out earn you, time and time again.
This is the big problem that we’re solving here at Trade Business Accountants.
This is what we provide all of our clients.
A service that is built around delivering real value and proactive guidance all year round that goes beyond just a tax return at the end of the year because this is what owners really need in their business to drive better performance and earn more money.
Traditional accounting is reactive, it’s about dealing with problems, or in most cases outlining the problem or trouble you’re in after the fact… but at TBA we just don’t believe in sitting on the sidelines waiting.
We give you proactive advice on your business model, your pricing strategy, your cash, your monthly performance and quarterly game plans and all these things to ensure that your business is on track against clear targets that we establish with you right from the outset.
No more guess work, we’ll arm you with the data and advice needed to drive forward.
We’re your teammates, your partners, and your allies, and you can leave everything financial to us and focus simply on what you do best: running your business.
If you’re missing any of these elements in your business or you feel as though you’re not getting the information you need to do better and that this is costing you... then click here to book in a call with our team.
I’d be happy to chat about how we can help you solve that.
If you're an electrician, plumber, painter, carpenter, or any other tradie business owner turning more than $1M a year looking for assistance with your tax, accounting, bookkeeping, and business advisory - click here to learn more!
