Fergus, the job management software designed for tradespeople, is providing trade business owners with tips to get their gross profit up in just 90 days.
The advice is based on real world experience from Fergus founder and tradesperson Dan Pollard, who successfully ran a heating and plumbing business before he founded Fergus.
“Having a plan will help trade business owners increase their profits by making efficiencies and pricing properly,” says James Chillman, UK Country Manager for Fergus. “In around three months we will be heading into the Christmas period. Get to grips with a plan now and by then you could be enjoying your festive time off knowing your business is in great shape for the next year.”
Here are seven ways to maximise your gross profit margin:
- Master your margins
Understanding your profit margin is fundamental to financial management. It involves knowing what each job should bring in after covering all variable costs, such as materials and labour. Aim for a gross margin that compensates for your fixed overheads. This clarity ensures each job positively contributes to your business’s financial health.
- Embrace effective job management software
Implementing job management software is crucial for tracking and boosting your gross margin for each project. With tools like Fergus, you can assign team members to jobs in seconds and see any conflicts, notify your team of any changes via the mobile app and look ahead to check what needs ordering and when. Fergus also offers real-time insights into financial performance, helping you make informed decisions swiftly. By managing every detail, from quoting to invoicing, Fergus ensures that no opportunity for profit is overlooked.
- Optimise labour efficiency
Labour costs often consume a significant portion of the budget so it’s essential to ensure that every hour paid is productive. Plan your workforce’s schedule meticulously to prevent idle time and unnecessary overtime. If you’ve booked a last minute job, check to see who is close-by to take it on so there’s no travel time wasted.
- Tightly control overheads
Regularly review and audit your overhead expenses to identify where spending can be reduced without affecting operational efficiency. This could involve renegotiating contracts, automating processes, or eliminating unnecessary expenses. Every penny saved on overheads directly increases your bottom line.
- Implement strategic purchasing
Effective inventory management is critical for maintaining healthy profit margins. Adopt a strategic approach to purchasing – buy enough to meet demand but avoid excess stock. Use forecasting systems to align purchases with actual needs, minimising waste and reducing costs.
- Refine your pricing
Ensure your pricing reflects the true cost of doing business, including all direct and indirect costs. Regularly adjust your pricing models based on competitive analysis and customer feedback to meet market demands and support your financial goals.
- Educate and engage your team
A team that understands the financial goals of your business is invaluable. Educate your team on how their work impacts the company’s gross margin. Engaging them in this way not only helps them understand their role in the company’s success but also empowers them to take proactive steps towards cost-saving and efficiency-enhancing measures. This fosters a culture of accountability and continuous improvement.
For a free trial of Fergus software visit www.fergus.com
