How Can You Effectively Balance Your Plumbing Business’ Finances?
Several plumbing companies are family-owned, small businesses, or perhaps a small group of contract plumbing experts who rely on word of mouth and repeat clients to keep the business going. If you are the owner of a plumbing business, you may find yourself juggling many things at one time. Between scheduling jobs, managing the construction team, competing with other plumbing companies, marketing your business, and tracking inventory, handling your company’s finances may seem to be overwhelming for you.
However, monitoring and tracking your finances regularly can be the main difference between ending up and falling into a hole by the end of the year. So for this blog, here are the top tips that can help you manage your company’s finances. Put all of these tips to use, and things will get easier, especially when unexpected expenses will come your way.
1. Set Revenue goals and the plans to reach them
When examining your entire budget, compare the money that regularly comes in against the money that goes out. Next, ensure to apply some simple logic in order to make the balance work. If you’re experiencing an increase in expenses in your company, you have to increase the amount of money that usually comes in. When you balance your books, take note of the negative and positive trends when it comes to revenue and expenses.
Determine what goals you have for your sales and revenue to stay on track and remain profitable. Because once you have those numbers, you can now plan your strategies for hitting the goals, whether that means boosting your marketing efforts, updating your pricing, or increasing the efficiency of your operations.
2. Keep financials up-to-date
As your plumbing business grows, your budget will change from time to time. Hence, setting aside enough time to review all your financials and update all your accounts is critical to staying on top of the line. Audit your financial data monthly and ensure that you track and record expenses and costs correctly. Doing so can help you make informed financial decisions. It’s best also to use project task management software to experience seamless tracking, monitoring and supervising.
Staying ahead every month will help you close out of the books by the end of the year because backlogging under the time crunch will put you at risk of missing important data. It may negatively impact your year-end statements and taxes. Make sure to review your financials every single month. You will indeed have extra time to make month per month and year-by-year comparisons.
The whole process will help you track your growth over time and spot seasonal trends.
3. Plan huge purchases in advance
Unplanned and significant expenses may devastate your budget, especially when you least expect it. When construction equipment and tools become obsolete, and the company vehicles may break down, you must consistently expand your toolset and current technologies for scheduling management. In contrast, your plumbing company keeps on growing. Using up-to-date financials when planning and for-profit projections can help balance your risks when huge expenses show up.
Detailed planning helps in preventing such large investments from being a huge burden for you.
4. Understand how seasonality impacts your company
The plumbing market can be greatly influenced by a few external variables such as weather, holidays and location. Tracking both positive and negative trends through service requests or types of service requests will allow you to make predictions as you‘ll face different seasons. In fact, seasonality factors that usually impact your plumbing business include cold weather causing pipes to burst, holidays wherein people host huge gatherings, new construction season, home-buying season, and periods of increased rainfall, leading to basement flooding.
If you’re aware that a busier season is upcoming, schedule your plumbing experts accordingly using subcontractor scheduling software. Using such an advanced tool, you can best track and monitor each of your crew’s performances, labor hours, etc. Ensure also that you all have the supplies you need in order to meet the current demand. And for slow seasons, you can scale back your costs as much as possible.
5. Make the most of your time
You may usually find yourself swapping time in an effort to save more money. However, take note that it is crucial to know your time’s value and make sure that you’re using it effectively. Efficiency starts in being wise in using your time, leading to more profit and productivity. To balance your finances more effectively, you have to determine your goals, have a clear plan and managed everything.
Have a daily schedule where you can stick to. Apply some time management tricks that can keep you productive and efficient. Lastly, delegate and outsource, and use advanced applications and other modern automation tools. A software tool, for instance, helps you take care of your business needs while focusing more on other important matters for your business.
6. Use Construction Scheduling Software
Statistically, large plumbing projects typically come in at a whopping 70% over your budget. And whether you are at the top of your chain, everyone in the entire process tends to operate and set under the actual budget. Using a specialized software tool allows you to get nearer to hitting your target budget.
Cloud-based software tools also allow you to run a quick audit of all the expenses, providing you and your employees some helpful insights into where the money is going. The tool makes it simple for you to determine the areas where you constantly come in over budget and better plan for upcoming costs. You can also track issues that causing the company’s budget to be blown down.
When you use such software, determining minor cost problems is more straightforward.
How can Cutting Business Costs Help You Balance Your Finances?
Even with less expensive marketing tools and technologies, running your business will cost you a lot of money, and such costs will increase gradually over time. It’s a factor that contributes to why you find it hard to balance your finances. So, to help you balance your finances and keep your profits up, you need to cut some business costs.
So here are some tips that can help you reduce some business costs, improving your bottom line.
· Barter for business services
Bartering is nothing new today as it has been a long way for everybody to change services. So if your plumbing business has excess capacity, why not use it to barter for other services and products you need for your business? For bartering to succeed, all parties involved should fulfill their obligations. And with any business relationship, do the right thing before you enter into a bartering agreement with a company you’re less likely familiar with.
Bartering can be a good way to help your plumbing business during slow periods and build up valuable relationships with other companies or businesses. So, it’s a win-win for you!
· Cut Marketing Costs
With more and more potential clients online than ever before, marketing doesn’t have to be costly. Begin first with building a strong online presence by creating a website and using social media. These ways can make you reach your market. In addition, email is another very effective low-cost marketing solution. You may want to send out news, tips, discounts and other information to establish rapport, keeping the market aware of your plumbing services.
· Cut Vehicle Expenses
If you’re running a contracting plumbing business that usually requires a vehicle, you’re no doubt very well-acquainted with how vehicle costs may affect your bottom line. Servicing and fuel costs, especially for crew cabs or other larger vehicles, can be astronomical. But how can you reduce your vehicle expenses apart from reducing vehicle use?
Not paying as much for a particular vehicle is one way, to begin with. Purchasing a cube van or heavy-duty truck for your plumbing business is a severe wallet-buster. So if you’re willing to settle for something that is not new, keep an eye on classified online dealers to find a decently used vehicle.
· Cut Insurance Costs
Insurance is a particular expense no plumbing business can able to avoid. Because without it, a lawsuit may put you out of business. With that being said, it’s best to avail yourself as much as business insurance as you can practically afford. Make discussions together with your insurance broker about every aspect of your insurance coverage, and let them shop around to get the best deals. You may find out that there may be surprising differences in rates on the same coverage and different insurance providers.
Suppose your plumbing business has tons of insured assets. In that case, you have to do an asset review alongside your annual insurance renewal, ensuring that you’re not insuring assets you no longer own.
Key Takeaways
Staying up-to-date with every single aspect of your business, especially your financials and expenses, will help you as an employer to run your plumbing business more efficiently. Again, time is money. And that is why it becomes an important consideration to purchase the best software solution that fits your company’s needs — as it will help you track all of the expenses and other costs.
