Electrical Small business owner help, not making any money....

[GoodwinElec]

Hi All
im after some advice, I own and run a small electrical business I specialise in letting agent works, testing, remdeials & repairs etc along with normal domestic electrical works.
I work long long hours usually 16 hours per day I get up at 5am and sort thru emails and prepare for the day then I spend 8 hours on the tools then do a 4-5 hour paperwork shift, invoicing, quoting, certificates etc.
we keep really really busy but dont seem to make much money my turnover is around £100k per annum and what's left after materials and business overheads is around £900 per week for my wage and business profits. is this enough to warrant being so stressed and overworked? what am I doing wrong? im exhausted but earning less than a subbie would for doing a 40 hour week and not taking the job and stress home with him.
its really affecting my mental health and family time. my prices are good but im stuck in a place where I have too much work for me alone and not enough to take someone on.

Any ideas??

 

[MBE2017]

Hi All
im after some advice, I own and run a small electrical business I specialise in letting agent works

Any ideas??

Your problem seems to be that your are not charging enough for the work involved. Being so busy and not making any money are a good sign you need to increase your rates.

 

[japancool]

Short answer: Put your prices up and take on another person.

 

[simon field]

Echo the above - don’t be a busy fool!

If you’re scared of putting your prices up, don’t be. You might (initially) have less work, but it will be at a better margin and much easier to manage.

A half-decent sparky round here (rural Norfolk so not exactly Kensington) is £300/day, just for info.

Oh, and a day isn’t 16 hours, it’s 8.

 

[Mark T Jones]

As above. Consider:

- put your prices up
- delegate/sub contract
- automate
- be selective in your clients

 

[fisicx]

Charge more, work less.

Only work 4 days and leave the 5th for admin. If you are spending 4-5 hours a day on paperwork you are doing it wrong.

 

[GoodwinElec]

Morning everyone
Thank you for your responses I guess going on the general consensus I need to put my prices up, one comment above mentioned a sparky earning £300 a day I don’t get near this after paying all expenses etc and business costs.
It’s difficult I always fear I’ll end up on rouge traders or something for charging too much or ripping people off.

Working 4 days on tools and one day on admin is the perfect scenario but real world never works out that way.

I’ve tried hiring people and they’re either not qualified and end up costing me time and money in the short term while they learn which I soon get fed up with or like the above post they want £300 a day which I can’t afford.

I will try lifting my prices and see what happens it’s hard to know by how much though isn’t it so it’s fair for everyone

 

[WaveJumper]

All good advice from above, you really do have to sit down and look at your pricing not sure what part of the country you are in but you'd never get a sparky under £300 where we are, if you can actually get one to visit in the first place.

You do need to get on top of your paper work, and part of that process is looking at the area you cover, the travel costs, etc etc don't take a job just for the sake of it (don't be that busy fool) if the numbers don't stake up pass on the work. You need to be working less for more. I have a family member in the building trade who has over a years worth of work staked up and wont travel any further than about 10 mile radius.

You should also be looking at you suppliers costs are you really getting the best prices. Check and double check. You are not going to end up on rouge traders unless you do crap work, customers want good work, someone who turns up when they say they and sorts the problem out professionally. And for that they will normally pay a premium.

And one last thought maybe drop the lettings work, I bet the agents all want it done for next to nothing but add their own little bit onto the invoice they charge out to clients.

And re your comment on the 4 day working, there's only one person stopping you from achieving this, and thats you. Step back and take a real hard look I think you may be very surprised at the outcome.

 

[bodgitt&scarperLTD]

Great advice above.

The best way I've heard it explained is as follows. You charge (for instance) £200 per day. Over five days you make £1000.

If you raise your rates to £250, a customer might drop out. Who cares? They were almost certainly the dross anyhow. So now you work four days a week, but make the same money.

Letting agents are always wanting the best price, and many of them charge YOU the tradie commission (because it's not legal for them to charge the client extra) Countrywide are one of the worst. I'd drop them first.

As regards taking someone on- I think it's essential for you. If you enjoy the job, you might enjoy it more with a keen young lad working alongside you. Much cheaper and less attitude (hopefully) than a qualified (but still crap) sparky. They learn some useful skills (perhaps even progressing to qualifications of their own), you get to focus on the important stuff and maybe even do some admin whilst they chase the wall and tidy up.

Once you have someone doing the donkey work, you will find it much easier to price a job in it's entirety, making good profit over day rate. This is key.

 

[fisicx]

Our sparky only does local. Won’t travel outside a few miles of the town. Pretty much all his paperwork is automated so his admin time is minimal. £250/day and he is booked up for months.

Don’t be frightened of putting up your prices and turning work away.

 

[Mark T Jones]

You have to go backwards to go forwards. If you employ people, it will take hands-off time training them up.

Systems take time to learn, but will pay you in the long run.

Cheap or demanding customers will never become good customer. Take the hit whilst focusing on the customers you want.

In the extreme - take a month completely off the tools to re consider how your business should operate.

 

[BubbaWY]

This is my area of business. but its difficult to pin point where you are going wrong.

What mark up are you putting on materials?
Do you pay for all materials at the same time as buying or have a credit account?
Do you have any rebates agreed with your suppliers?
What hourly rate do you work on?
Have you factorered in all your business expenses into your rate? (transport, insurance, PPE, tools, etc?)
Do you include travelling to and from the customers in your price?

According to the JIB rates, a shop employed technician will be on £17.75. But you then need to factor all your self employed/business costs.

From experience, based on £100k turnover, you should be making a profit of circa 15%. This is after taking a wage so you need to quickly pinpoint where you are going wrong.

 

[Clinton]

I disagree with a lot of the wise posters above. It's not about prices.

You've created a job for yourself. A badly paid job. Close it. Get someone else to pay your salary instead of trying to pay it yourself.

 

[bodgitt&scarperLTD]

I disagree with a lot of the wise posters above. It's not about prices.

You've created a job for yourself. A badly paid job. Close it. Get someone else to pay your salary instead of trying to pay it yourself.

I agree with your first sentence, but there's no reason he can't make a successful business from it. He has the skills, the work is there in spades currently, he just needs to look at things a different way.

 

[Socio South West]

Hi All
im after some advice, I own and run a small electrical business I specialise in letting agent works, testing, remdeials & repairs etc along with normal domestic electrical works.
I work long long hours usually 16 hours per day I get up at 5am and sort thru emails and prepare for the day then I spend 8 hours on the tools then do a 4-5 hour paperwork shift, invoicing, quoting, certificates etc.


Any ideas??

It sounds like you are at the simple fiddlesh1t end of the electrical work spectrum, and earning that sort of money.
As @Clinton says, its effectively a low skilled job, and by your own admission not well paid.

If you don't try to develop - get someone to do the drudgery of the admin and invoicing, get some larger more lucrative projects etc or adjust your rates to make the hassle worthwhile you might as well pack it in and work for someone on a day rate and do away with the stress of it.

 

[Paul Kelly ICHYB]

- put your prices up
- delegate/sub contract
- automate
- be selective in your clients

This is pretty accurate.

• Don't be a busy fool
• If you delegate your admin work, you will be able to work and bill more
• Use accounting software that makes billing and collecting money easier.
• Choose the ones that you are happiest with, make you money and don't waste your time.

BTW, @GoodwinElec, you mention that you earn about £47k a year. That's not bad. With some fine-tuning, you could increase that by 20%. If managed well, bringing someone else on could increase that by 100%+.

 

[GoodwinElec]

Thank you all so much for your replies I will reply to them individually later once I’m home and in front of my laptop. I really appreciate you all taking time out to offer help.

With regards to being automated I use Tradify software which helps i can quote, invoice and book jobs in all on one platform but like I say if I do 3 tests that day thats 3 x 8 page docs to sign off and send 3 x invoices 3 x quotes if remdiel works are required.
Plus I usually come home to 10 plus emails and texts and phone calls to reply to as I don’t have time in the day. I’m good at what i Do in getting new business in and being on the tools but I know I’m bad and simply don’t have time to do what I’m not good at.
It’s a lot to run every aspect of the company
And also work for it.
I do need to take a step back and evaluate it all as some have mentioned and make vital fundemental changes for my sanity and mental health if nothing else!

 

[fisicx]

The advice doesn’t change. Charge more and work less. Get rid of the clients that eat up your time for little profit.

 

[Financial-Modeller]

You've had excellent advice already, which I won't repeat,

But based on very limited info provided, and using the £300 day rate provided by someone as an example, you're providing your clients with c.£50k of parts and £70-75k of labour every year, but charging them only GBP100k for it.

Its not surprising that you are so busy!

 

[japancool]

I’m good at what i Do in getting new business in and being on the tools

Which one do you want to do, run a business or be on the tools?

If it's the latter, go and work for someone else. Then you can be on the tools as much as you want.

If you want to run a business, give up doing the jobs yourself, concentrate on bringing new business in and hire someone else to do the jobs.

 

[GoodwinElec]

Which one do you want to do, run a business or be on the tools?

If it's the latter, go and work for someone else. Then you can be on the tools as much as you want.

If you want to run a business, give up doing the jobs yourself, concentrate on bringing new business in and hire someone else to do the jobs.

Yes I’d like to be running the business it’s what I enjoy doing although clearly don’t do it very well.

I have taken all the advice on board and will look at my pricing structure and the view of taking someone on maybe as an improver so they have a head start on knowledge so I’m not teaching them for long before I can get off the tools.

I do lots of small jobs sometimes 5/6 per day changing a light fitting, fitting an extractor fan I usually do these for around £50 labour as they take an hour or so each maybe this is why struggling as I’m pricing lots of little jobs instead of one larger one say like a Rewire or new build house.

Again thank you all for your advice I will make a plan probably over Xmas break now as I don’t have a spare day until then off.

 

[Paul Kelly ICHYB]

So charge £50 an hour, but a minimum call out of £75 or £100.

3 quick (1 hour) jobs a day, and that is £20k a year extra already!

 

[fisicx]

I do lots of small jobs sometimes 5/6 per day changing a light fitting, fitting an extractor fan I usually do these for around £50 labour as they take an hour or so each maybe this is why struggling as I’m pricing lots of little jobs instead of one larger one say like a Rewire or new build house.

Bin all of these. Don't even quote for them. The only time you would do jobs like this is if you are in the same road and can fit it in at the start/end of the day.

Consider this, you need to get to the location, assess the job, get the parts, do the job, drive to the next location and then do all the paperwork. That a couple of hours at least so a minimum of £100.

 

[HFE Signs]

You have all the advice above, you really need to weed out the non-profit or low profit jobs - I'd suggest a suitably pitched minimum call out too.

 

[Financial-Modeller]

...I do lots of small jobs sometimes 5/6 per day changing a light fitting, fitting an extractor fan...

Are you charging a reasonable margin on light fittings, fans, wires, solder etc?

I was speaking with a mate who is a sparky, who proudly explained that he only ever charges parts at cost, because he didn't want to be seen to overcharge his customers.

He would drive from the customer to the electrical supplier to buy a single light fitting or fan, plus a couple of meters of mains cable, drive back to the customer's premises, fit it, then invoice parts at cost plus his labour for the time spent on site!

It hadn't occurred to him that buying a few light fittings and a 100m drum of mains cable at trade discounted price and leaving them in his van would save him time and travel costs, and then charging parts at retail plus his labour wouldn't be overcharging!

 

[GoodwinElec]

You have all the advice above, you really need to weed out the non-profit or low profit jobs - I'd suggest a suitably pitched minimum call out too.

Yes that’s a good idea I don’t charge a call out or minimum fee either. Yes I agree I have great advice above which I’m really really grateful for and will implement asap.

 

[GoodwinElec]

Are you charging a reasonable margin on light fittings, fans, wires, solder etc?

I was speaking with a mate who is a sparky, who proudly explained that he only ever charges parts at cost, because he didn't want to be seen to overcharge his customers.

He would drive from the customer to the electrical supplier to buy a single light fitting or fan, plus a couple of meters of mains cable, drive back to the customer's premises, fit it, then invoice parts at cost plus his labour for the time spent on site!

It hadn't occurred to him that buying a few light fittings and a 100m drum of mains cable at trade discounted price and leaving them in his van would save him time and travel costs, and then charging parts at retail plus his labour wouldn't be overcharging!

Yes although I do keep lots of stock in my van I do however only charge most materials at cost as like your friend I’m always worried I will be told I’m expensive and labelled a fraud or something.

 

[GoodwinElec]

I think also my issue is my business is made up of lots of these small jobs which some of you are suggesting I bin off and keep to larger jobs but they aren’t so frequent to come by I’d love to do back to back rewires but they don’t come up that often and new builds are increasingly difficult to get into and getting a foot in the door of a developer or builder is hard to say the least. I send out emails bi monthly to all the local builders I’ve compiled email address from trawling Google but that doesn’t bring much in.

 

[Financial-Modeller]

Yes although I do keep lots of stock in my van I do however only charge most materials at cost as like your friend I’m always worried I will be told I’m expensive and labelled a fraud or something.

You need to recognise the value that you are providing to your clients and charge accordingly.

There is nothing fraudulent about providing an excellent and valuable service and charging appropriately for it.

 

[MBE2017]

OP, I think what you need to do is start running your business, not letting the business run you. Currently, pardon the pun, you are a busy fool.

I understand when starting out pricing competitively to get work to get money coming in, but you now need to analyse how to make money, run the business and have a life as well.

Sit down and breakdown the kind of jobs you are doing, if you have lots of small 1hr type switching faulty fan and light switches for instance, work out what you hourly rate has come to.

As for materials, ideally pass the trade cost on, but keep the discounts yourself, get a monthly trade account at a wholesaler. I used to run several electrical wholesalers in my youth and know loads of sparkles. Most are now well retired by fifty, and I used to pay £400 a day twenty years ago to get quality work.

Once you have worked out your jobs, you will probably see a pattern emerging, too many short jobs, travel not charged for etc. I always used to set my prices based on a forty six week year, with three and a half day’s work each week.

You need to find what works for YOU, but I guarantee if you replace a 4” bathroom fan for £50, you could do almost as many for £95.

 

[bodgitt&scarperLTD]

You need to recognise the value that you are providing to your clients and charge accordingly.

There is nothing fraudulent about providing an excellent and valuable service and charging appropriately for it.

This. Charge well, but do exactly what you say you will, when you will. Be polite and professional. Target the wealthier clients.

 

[IanSuth]

Just an idea.

If you live in an estate location I bet there is a local young mum with experience in something like sales order processing crying out for some flexible paid work.

Teach them your system and let them work around nursery/school hours and you will get a lot of bang for your buck and a loyal worker freeing up you from admin tasks. Find one who has a partner in the trades even better as the networking will help with getting in on bigger projects

 

[bodgitt&scarperLTD]

Just an idea.

If you live in an estate location I bet there is a local young mum with experience in something like sales order processing crying out for some flexible paid work.

Teach them your system and let them work around nursery/school hours and you will get a lot of bang for your buck and a loyal worker freeing up you from admin tasks. Find one who has a partner in the trades even better as the networking will help with getting in on bigger projects

That's a great shout. I assume OP doesn't have a wife sitting at home not doing a lot, as that's another option.

 

[fisicx]

Yes although I do keep lots of stock in my van I do however only charge most materials at cost as like your friend I’m always worried I will be told I’m expensive and labelled a fraud or something.

Stop doing that. Charging at cost means you are losing money. Nobody is going to call you a fraud and if they thing you are charging too much you don’t want them as a client.

Don’t wait until Christmas. Up your rates today.

 

[Mark T Jones]

Yes I’d like to be running the business it’s what I enjoy doing although clearly don’t do it very well.

This is actually very common with trades - something I learned when running start up courses.

It's generally quite easy (too easy) to become busy, most then get too busy to do the business stuff (well done you for recognising its importance). One of my customers was a gas fitter who actually served time for fitting fires when his CORGI registration had expired - everyone accepted it was an oversight, but he still got 4 months.

I digress.

As a personal view, there is absolutely nothing wrong with wanting a self-employed job on the tools, but you have to be extremely strict with yourself on your charges & the work you take on.

On the other hand you can start a contracting business; which requires a lot of people skills and a clear business strategy.

The 2 don't mix at all well.

As an aside; everyone would expect you to put at least 10% mark up on supplies.

 

[Mitch3473]

This is pretty accurate.

• Don't be a busy fool
• If you delegate your admin work, you will be able to work and bill more
• Use accounting software that makes billing and collecting money easier.
• Choose the ones that you are happiest with, make you money and don't waste your time.

BTW, @GoodwinElec, you mention that you earn about £47k a year. That's not bad. With some fine-tuning, you could increase that by 20%. If managed well, bringing someone else on could increase that by 100%+.

Agree with above. Increasing your prices by 20% may seem a lot but if you factor in, in your own mind, you'll loose 20% of the work, which you wont....you're earning the same for less work. What you will find is you may, maybe loose 1 or 2 clients, usually the ones you dont want anyway and what will happen you will attract a better class of payers/customers. Go for a 30% increase and let people ask themselves...why is he more expensive than ' Sparky and Co'. It's a confidance thing and If you've never done it before, a leap of faith, it will work.

 

[DontAsk]

Yes although I do keep lots of stock in my van I do however only charge most materials at cost as like your friend I’m always worried I will be told I’m expensive and labelled a fraud or something.

Customers telling you that are the ones you don't need. It's not fraud to make a profit.

Simplest solution is to not itemise everything, just quote and invoice for the job.

Our builder does not itemise blocks, cement, plasterboard, etc.

We had a new boiler fitted, they didn't itemise the boiler, TRVs, pipework, etc., etc., ... I chose them based on the overall cost of the job.

 

[WaveJumper]

Are you charging a reasonable margin on light fittings, fans, wires, solder etc?

I was speaking with a mate who is a sparky, who proudly explained that he only ever charges parts at cost, because he didn't want to be seen to overcharge his customers.

He would drive from the customer to the electrical supplier to buy a single light fitting or fan, plus a couple of meters of mains cable, drive back to the customer's premises, fit it, then invoice parts at cost plus his labour for the time spent on site!

It hadn't occurred to him that buying a few light fittings and a 100m drum of mains cable at trade discounted price and leaving them in his van would save him time and travel costs, and then charging parts at retail plus his labour wouldn't be overcharging!

I dread to think what his diesel bill was each month

 

[BusterBloodvessel]

Couple of questions from me if I may - what paperwork are you doing that's taking 4 or 5 hours every night? Something is seriously wrong there.

Secondly, you gave an example of

"3 tests that day thats 3 x 8 page docs to sign off and send 3 x invoices 3 x quotes if remdiel works are required."

How much are you charging for one of these tests?



One of my best mates is in a similar game (he is more reactive maintenance/repairs, but like you most of his work is through local estate agencies). Couple of things, his minimum call out fee is £80 - no ifs, no buts. Some of his jobs can be as little as fitting a smoke alarm or boarding up a window. He's at the property less than 5 minutes (literally). Doesn't matter - he's still got to drive there, potentially pick up some parts on the way, drive to his next job, raise the invoice later, wait for payment....it all adds up. Also, he doesn't provide formal quotes for any of these small jobs less than a few hundred pounds - he'll put it in writing on Whatsapp or in an email and get written confirmation to go ahead, as he can deal with this on the fly from his phone during the day. He won't sit down and do a formal letterheaded quote and start itemising exact costs for someone to start picking apart ("you've quoted £12 for a smoke alarm, I've seen them in toolstation for £7.99" etc).

He's also moved gradually away from private work and in particular small jobs ("can you come and hang one door") and in fact he closed his Facebook page. There's too many people that don't see the value in the experience and knowledge he has not to mention the time outside of doing the actual job, or people wanting to supply their own (inferior) materials that he then has to work with. It does make me laugh when I sometimes see people posting in local Facebook groups along the lines of;

"Looking for a handyman to come and hang one door. No ridiculous prices please, already been quoted £50 which is ridiculous for a 10 minute job!"

I always just think...if it's such an easy job, do it your bloody self then.....oh wait, you don't have the skills, knowledge or tools required! ?

 

[The Byre]

This reminds me of that story about when we were doing concert sounds and lighting in Germany and were getting paid, so I went to the US promoter and complained and the young guy there told me that they were paying the agent promptly, so if we were going out with a whole team putting up systems without getting paid "then I must assume that I am talking to an idiot!"

Best business advice I ever received!

So this is a business-101 situation and here are my points on the whole thing -

1. I pay €75 per call-out and €50 per hour plus VAT (German business) and about the same in the UK. And I do not haggle and we always pay promptly - that way I know that they'll come when we call and the work will be done well.

2. Get someone to do all the admin. There are certain things I refuse to do and admin comes right at the top of that list. My time is too precious for faffing about with bookkeeping and invoicing and bank accounts and checking card payments and stuff like that. I do not even talk to the accountants - though I do go to their clients' Christmas-do occasionally!

3. We get asked for hourly rates (facility hire) and I quote days and sometimes half-days only. One hour here and one hour there is madness! The trades we use are the same - half a day is really the minimum.

4. You are a business and not a charity so stop selling at cost! It costs money to buy things over and above the actual cost of the item - charge for ALL your time, inc. the time spent sourcing parts!

And good luck! (If it doesn't work out, you can always follow @Clinton's advice!)