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How profitable tradies use reporting to keep their eye on the prize
Michael Alexander
Share 25 November 2021
The amount of information tradies can capture through technology and digital solutions nowadays is breathtaking. And when you automate your systems and processes, your trade business has access to reporting tools, which means all the information that you need to run your businesses is centralised in one place. Profitable tradies know how to utilise these reporting tools and metrics to grow their business.
With the right systems in place, your trade business should be able to track how every part of its operation is running against its key performance indicators. And when you better understand how your business is tracking, you’re in a far better position to:
Grow your business.
Understand your tax obligations.
Maintain a positive cash flow position.
Know what your shareholders have available to draw out for their own use.
[Related: The tradies guide to automating your business for better productivity and profitability.]
KPIs your trade business should be measuring
KPIs you can measure should include gross profit, wage percentage and cashflow. But, it’s also important to measure non-financial metrics such as number of positive customer reviews, percentage of health and safety assessments lodged for the month and productivity percentages of your team.
Measuring metrics like these can help highlight any red flags in your business before they become major problems. Take team productivity for example. A drop of five percent in productivity in a team of five people can mean a loss of $40,000 in a year. Profitable tradies catch this early to help prevent this.
Spotlight reporting for trade businesses
Spotlight reporting is a tool that helps trade businesses develop integrated reporting and forecasting that creates insights to inform better business outcomes. It is a centralised tool that collects your key business information from all your data sources and collates and presents the information in a way that makes sense to people without an accounting degree.
Rather than having to read numbers, spotlight reporting offers a more visual, graphic-based approach to see how you’re tracking and can be a vital part of any digital ecosystem. By integrating information directly from your accounting system, your website and any other information sources that are available to the business, spotlight reporting gives you access to management reports, dashboards, forecasts and consolidations.
Types of reports your trade business should be using
Once you’re generating great data, the next step is to use it. There are a few key reports that profitable tradies focus on to keep their finger on the pulse.
Profit and loss compared to budget
Set a budget at the start of the year and track how you are performing as the year progresses.
Cashflow report
Understanding profit is one thing but do you understand how your cashflow is tracking?
Using the budget you’ve created, map out what your predicted cashflow is over the year to help ensure you are ready for any months that are stretched.
Aged debtors
Are your customers paying on time? It is important for cashflow to chase up overdue payments, put payment plans in place or stop the job if the client isn’t paying.
Job profitability
Understand which jobs and/or employees are making you money, and which need to be worked on. This information can help you understand the drivers whether they be under-quoting, employees taking too long or an increase in material prices. And when you understand the drivers, you can adjust the way your running your jobs
Health and safety
To help ensure your trade business is meeting all its legal obligations, there are some key metrics that a Director needs to know. These include percentage of health and safety assessments conducted, the number of site visits your team are making, the number of reported incidents and the number of near misses.
Download The tradies guide to automating your business for better productivity and profitability
With activity heating up in the trades and construction industry, it’s more important than ever for tradies to save time and maximise efficiencies wherever you can. Streamlined processes enabled by digital systems can help tradies make some real dollar gains.
If you’re ready to get admin work completed faster and efficiently delegate more tasks to your team, download The tradies guide to automating your business for better productivity and profitability to learn how automation can benefit your trade business and what you need to consider when selecting digital systems.
