Many business owners tell me they don’t like numbers, but most tell me they like money! When you get a handle on your numbers you will make more money. Knowing your business numbers is how you keep score and keep your business on track so you can make more money and have more time to do the things you enjoy.
Key Takeaways
- Knowing how much you make on each job helps you focus on profitable work and avoid jobs that cost you money
- Never confuse mark up and margin – if you want 20% margin, you need 25% markup
- Cash flow is like oxygen for your business – getting paid on time, in full is even better than winning the job
- Small changes made quickly can have a massive impact on your profits and cashflow
- A simple dashboard helps you monitor key numbers and make informed decisions quickly
How Much Do You Really Make on Each Job?
Knowing how much you make on each job will help you work out which jobs you make good money on and which jobs you lose money on. This way you can avoid the jobs that cost you money and focus on the jobs that make you money. These types of jobs can differ from business to business so be sure to work it out for your business.
Too many tradies take on work without understanding their true profit margins. When you track your numbers properly, you’ll quickly see patterns emerge. Some job types consistently deliver strong profits, while others drain your resources and leave you understaffed, overworked and underpaid.
Why Competitor Pricing Will Kill Your Profits
Pricing jobs correctly is a skill that can be learnt and refined. Basing your prices on what your competitors are doing is not a great strategy. You will be surprised, often your competitors don’t know what they are doing!
According to the Australian Bureau of Statistics, many small businesses struggle with profitability due to poor pricing strategies. When you price based on your actual costs and desired margins rather than guessing what others charge, you create a strong, profitable business that can weather economic storms.
The Critical Difference Between Markup and Margin
Never confuse “mark up” and “margin.” The mark up you need to apply to the costs directly related to the job is always going to be higher than the margin you want to make and you need to have a healthy margin to help pay for your fixed expenses and of course ensure you make a profit.
The easiest example is if you want to make a margin of 20% you need to mark up your price by 25%. $800 marked up by 25% is $1000. A $1000 minus $800 equals $200 which is 20%. We have a simple calculator which can help you work out your margins and mark up. If you’d like a copy just send me an email and I’ll send it to you.
This confusion between markup and margin costs Australian tradies thousands of dollars every year. Understanding this difference is fundamental to building a profitable operation that supports your lifestyle goals.
Why Cash Flow Is Your Business Oxygen
Cash flow is like oxygen for your business, without it your business won’t survive. Winning the job and doing the job is good, getting paid on time, in full is even better.
The Australian Taxation Office reports that cash flow problems are one of the leading causes of business failure. Implementing strong invoicing systems and payment terms isn’t just good business practice, it’s survival.
Through my Ultimate Tradie Business Transformation programme, I’ve seen countless businesses turn around simply by getting serious about their cash flow management.
How Small Changes Create Massive Profit Increases
Measuring and monitoring your numbers. Small changes made quickly can have a massive impact on your profits and cashflow. Having a simple dashboard so you can monitor a few key numbers will help you stay on top of your numbers so you can make informed decisions quickly and easily to maximise your profits and cashflow.
I work with business owners who’ve increased their profits by 30% or more just by tracking the right metrics and making small adjustments based on what the numbers tell them. This is the power of clarity, confidence, certainty in your business operations.
Frequently Asked Questions
What numbers should I track as a tradie?
Focus on job profitability, cash flow, overhead costs, and customer acquisition costs. These core metrics will give you the insight you need to make smart business decisions and avoid the trap of being busy but not profitable.
How often should I review my business numbers?
Review your key numbers weekly at minimum, with a deeper monthly analysis. The faster you spot trends and problems, the quicker you can make adjustments to keep your business on track.
What’s the difference between markup and margin again?
Markup is what you add to your costs. Margin is what’s left after you subtract costs from your selling price. If you want a 20% margin, you need a 25% markup. This difference is crucial for profitable pricing.
How do I improve my cash flow without losing customers?
Implement clear payment terms, offer payment options, invoice promptly, and follow up on overdue accounts professionally. Most customers respect businesses that are organised about money.
Should I use accounting software to track my numbers?
Yes, good accounting software makes tracking your numbers much easier and more accurate. It also saves you time and reduces errors compared to manual tracking methods.
Ready to get serious about your numbers and start earning more money from less work? Every successful tradie I work with has learned to love their numbers because numbers don’t lie, they just tell you exactly what you need to do next. Book a Business Breakthrough Meeting and let’s work out which numbers will make the biggest difference to your bottom line.
