For many contracting business owners, transitioning from a person being paid as a sole trader, effectively being paid for working in the business, to a business owner managing others is a challenge owners would like guidance on if they have not held a management position in a large business. The challenge is that they are skilled at their craft but less comfortable with delegation and business management. This blog can be used as a guide to help you through the early stages, with a focus on the finances, to ensure your business remains profitable at every stage.
1. Build a Financial Foundation
Before you can grow, you need to know your numbers. Start by getting a clear picture of your income, expenses, and profitability:
Track Everything: Use accounting software like QuickBooks or Xero to monitor income, costs, and taxes. Keeping everything digital reduces errors and saves time.
It is good practice, if the projects can be allocated a code, and they have their own profit and loss calculated. Keep the costs of overheads separate as these are spread over all projects. Know your overheads as a percentage of forecast turnover, this will help you price accurately and ensure you at least break even.
Create a Buffer: Aim to save 3–6 months of operating expenses. This will protect you during quiet periods or unexpected setbacks.
2. Streamline Your Processes
Running a business requires more than just doing the job; it’s about how efficiently you do it. Start by creating repeatable systems for tasks like:
Marketing and business development
Forecasting the turnover
Creating a project baseline
Estimating
Planning
Base line information / Drawing register
Understand the contract conditions
Risks for Health, Safety and the Environment
·Organising a project
A procurement schedule
An information required schedule
An inspection and test plan
·Payments
Client and subcontractor valuations
Goods received
Plant hire control
·
Reviewing a project
Progress – planned works versus actual works
Cost value reconciliation
Non-conformances on quality
·
Handover
Snagging process
Compiling the O&M’s
Contributing to the H&S file for CDM and BSA
Document Your Workflow: Write down how you handle each stage of a job, from initial inquiry to final payment. Investigate the use of software to manage these processes.
Schedule Regular Reviews and refine how the processes are done. Once you have systems, it is then a case of arranging for others to carry them out as you gain more business.
If you would like help putting in place any of the processes mentioned, please contact me. Peter.Searle@ba4cs.co.uk
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