Philip
B. Wicks
Business
Advice in the Building Trade
http://p-b-w.co.uk
Example
Clients:
Problems & Solutions
Building Trade and
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" I help the owner(s) make more money with less stress"
Example Clients: Problems & Solutions - Example C
In this example, I outline the problems and some of the solutions for this type of client.A Decorating Firm - The Problems:
Owner has been bankrupt some years ago and debts are rising again.
He turns over about £250,000 per year doing mainly domestic jobs. He uses half a dozen employees and labour-only subcontractors.
Working with the owner establishes that he is constantly hand to mouth with money coming in and quickly going out to pay wages and creditors. The big creditors are VAT and Inland Revenue. He has accountants but only uses them to prepare end of year accounts. The previous year showed a low profit, but the owner had taken a bit of cash and he felt he had probably made reasonable money overall.
The Solutions:
We set up a properly devised system for paying subcontractors, and temporarily set up a system for calculating profit on a weekly basis. It quickly emerges that he is making hardly any profit - he pays too high a percentage to his workforce (60%) and on materials (20%) - and he is wasting money on vans and workers' telephones.
Now the owner knows that he is not really making any money at all, he can now implement changes. His men are paid by the hour, which he realises is risky, but it is agreed to set targets and introduce a bit of gentle pressure to get work done within a budgeted time. Converting to price work can be done if that doesn't work, but the owner is reluctant to introduce such a big change if it is not needed.
Further analysis shows that some of the quotes are too cheap - mainly interior jobs - where protection and furniture nearly always require more time than he has allowed for. Prices on interior jobs are raised. And the wording on quotes is tightened up to more easily permit charging of extras when appropriate. A very slow decorator is a given a written warning.
Jobs are pushed through a lot harder than before. Profits on jobs improve to a degree, one of the vans is sold and the owner stops paying the mobile phone bills of his decorators. The owner is now at least making a living (£40,000), but not what he wants (£70,000) .
With further work together, other changes are made such as increasing prices on small jobs - it was found that small jobs were unviable. decreasing prices a little on large, simple jobs changing how jobs are finished, to pick up snags before the labour leaves site sending mail shots to schools for which the work was usually profitable.
Carefully monitoring the effect of the changes, doing more of what works, and changing what does not, produces the desired result and the owner makes £70,000 a year with somewhat less stress than he suffered making hardly anything. The owner finds that even with the changes in place, he likes the opportunity to go over what is happening on a regular basis with someone who understands this particular business.
The resolution of a certain set of problems does not mean the end of making improvements. Businesses can easily go off course without active management.
See also:
- Example A: A Plumber, working as a sole tradesman. He is doing quite well but wants to make more money
- Example B: A Small Building Firm that is busy but making no money
- Example D: A Joinery Shop which is doing well, but they need a book keeping system
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Material Copyright © 2005 Philip
Wicks