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

[GoodwinElec]

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! ?

Hi
Typing up the certs and sending invoices and working out quotes can vary between 2-3 hours then I’m replying to texts and emails and back an forthing with customers to book in works.

Ordering material online if required.
Updating Tradify.
Any other business related admin stuff.
This all usually totals 3-5 hours per night. Not always but often more than not.

My fees for testing are dependant on property type and size
Between £120-£160 usually as a rule.

Call out fee is a good option I think, I currently don’t charge a call out or minimum fee.

I am going to go thru all these replies very carefully and implement all this good advice you guys have offered.

 

[fisicx]

My fees for testing are dependant on property type and size
Between £120-£160 usually as a rule.

Testing what? If it's wiring for certification it cost us £600 last year.

 

[GoodwinElec]

Testing what? If it's wiring for certification it cost us £600 last year.

Yea it’s a full EICR the 5 yearly check.
I think my fees are the going rate-ish.
Some do cheaper “budget” version which will fail on loads to make their money up but my tests are done fairly and to the book.

 

[fisicx]

Yea it’s a full EICR the 5 yearly check.
I think my fees are the going rate-ish.

Nope. Way too cheap. Just like everything else you have described in your posts.

Did a bit of investigation and selling at cost is just daft. It should be at least retail cost + 10%.

Everything comes back to the same thing. Charge more and work less. 4 hours on the tools in the morning and 4 hours doing paperwork in the afternoon. And never work weekends unless it's an emergency and then you charge mega bucks.

 

[fisicx]

How long does an EICR check take? Let’s say 3 hours. Add another hour for travel there and back. And another hour for the paperwork. At £50/hour that’s £250.

Then add in all the other costs: tools, insurance, registrations, petrol, MOT, servicing and so on. This adds to your costs.

It means for every EICR test you are losing £100+. You are ripping yourself off.

 

[Craftymetal]

I’m in a different trade and entirely workshop based (welding and fabrication work)

I was in a similar situation I kept on having loads of little repair jobs £20 here and there or customers just wanting to purchase a tiny bit of material . I also used to get loads of phone calls from people simply wanting advice or something.

I was always busy(still am booked out for months) but making no money the bigger jobs I had in were always getting held up by the smaller jobs or I had to turn certain work down

what I implemented was a simple £40 minimum charge and I advertised this on my google business page, website etc.

I get very few small jobs now and those that do come in are willing to pay the minimum charge so effectively doubling the price. Phone calls have reduced and now getting far more quality calls. Got a bit more time now to work on the business and focus on the larger more profitable jobs.

I also never used to charge a markup on materials I now do charge a small markup and it’s never been questioned.

Definitely worth bringing in a minimum call-out charge and to also add on a small markup on supplies I would have thought those two changes alone would really change your outlook on the business

 

[Gill Courage]

Some very good advice here. If you want to keep doing the actual work yourself (by yourself or with somebody else) you desperately need admin help. Hourly cost for a decent office manager is far lower than the cost for a sparkie so make the most of your own hours (while upping the charges).
Use tech to streamline diary, customer contact, accounts etc and pay well so you get somebody good at what they do. The longer they stay with you the more valuable they will be as they learn the specifics of your business and your regular customers.
Once you have it up and running smoothly it is very little extra hassle/work to add another tradesman. You won't double your money by the time you have paid them but you will get a nice extra chunk of profit for very little extra effort.
Working for yourself it is very easy to get smothered by the detals and be totally unable to see the big picture.........like the old joke goes, when you are up to your ass in crocodiles it is easy to forget you actually came to drain the swamp!

 

[Marbman]

I can also vouch for sparkies charging 300 a day as this is what I was recently charged although I live in a fairly built up area of Surrey close to London so perhaps this affects the price.

 

[N-UPS]

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.

That is above reasonable of you, and a can be part of the deal for an £80 for the first hour then down to your usual £50 per hour.

Not only are you providing the parts at cost, you have them to hand at the instant they are needed.

Parts price people can check online and it shows you in good light if you've supplied at cost.

Your hourly rate is just your hourly rate, none comparable, and part of the deal of your quality/service.

Also most things have gone up 10% in the last year. Time for £55 per hour.

 

[Lucan Unlordly]

Typing up the certs and sending invoices and working out quotes can vary between 2-3 hours then I’m replying to texts and emails and back an forthing with customers to book in works.

I'm going to throw in a suggestion that is unlikely to fit in with most business peoples views.

Having been in a very similar situation myself, it was my doctor who said don't double your problems by employing somebody to get yourself out of trouble. To sort the processes out first. But how?

Not having a good enough system for invoicing in place, I was staying late, working tired, fiddling through post it notes, searching for emails etc., So I stopped sending invoices!

Direct orders are now sent, invoice to follow, which may take a week, a fortnight or longer to be paid on receipt. None of this pay in 30 days lark
I invoice all at once on a quiet day, often a Sunday afternoon when no interruptions are guaranteed.
Getting the order out takes priority over the admin and I've removed a huge daily 'must get this done, must get that done' burden, simply to fit in with so called good practice.
Your burden may not be invoicing but try to separate each task and deal with them separately rather than all at once, and in your time.

Bad debts? Just one this year for £150 quid. The typical late order favour for a good customers mate who's paid on the nail for 2 years but gone a little shy this. Living just 20 minutes up the road I'll be dropping in to help him come out of his shell.

 

[MBE2017]

When I mentioned 30 day accounts I meant with the wholesalers, not clients, just for clarification.

Well worth taking a few hours and finding it what is worth stocking, I wouldn’t worry too much about online prices, I would just charge at trade and keep the discounts.

Things might have changed a bit now, but as an example a 4” toilet fan basic model would normally retail £15 as an average, but could be picked up for £5-6 each a couple of years ago. Cable and lighting will have large discounts on them 25-65% and so on.

Anyone querying price just give them a wholesalers number and say you just charged the trade price as normal. You can always drop a discount if you feel it necessary.

A friend of my wife’s asked myself to change a light pendant her young boy damaged playing football inside. Cost of the parts no more than £5 but she is being quoted £80+vat for a five minute job. I explained it just isn’t worth most sparkles turning up, not that they were rip off merchants, she happily paid a guy to do it.

 

[Talay]

I suspect the OP is so far behind the real price he needs to charge, having been working for so little for so long, that the thought of perhaps doubling or tripling his prices is something he won't want to consider.

 

[Talay]

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.

Totally agree.

 

[BubbaWY]

Totally agree.

I find Clinton's post slightly disingenous and dont agree at all. When starting up a business you are on a long learning curve and just to chuck it in and 'get someone else to pay your salary' is pretty poor advice. Who is to say the creater of this thread wont go on to have a thriving business in 5 years time?

Everyone has to start somewhere in business. Nobody will get everything right, all the time; not even experienced business owners.

 

[Mark T Jones]

I find Clinton's post slightly disingenous and dont agree at all. When starting up a business you are on a long learning curve and just to chuck it in and 'get someone else to pay your salary' is pretty poor advice. Who is to say the creater of this thread wont go on to have a thriving business in 5 years time?

Everyone has to start somewhere in business. Nobody will get everything right, all the time; not even experienced business owners.

It's probably a question of interpretation. My interpretation of Clinton's post is that the business as it stands isn't scalable and will almost certainly lead into a low-paid self-employed job.

The OP has made the first step of coming on here & asking, which is positive - to create a thriving business will start with a big step backwards and re-evaluation of how they work.

 

[MBE2017]

The OP has made the first step of coming on here & asking, which is positive - to create a thriving business will start with a big step backwards and re-evaluation of how they work.

Totally agree with this, I replied right at the start the OP was charging too low and it was not meant to put the guy down, he is not the first and he definitely will not be the last to make this mistake.

There is an urgency about sorting this out, particularly at the stage this economy is in now. Doing less but more profitable work helps buffer against any potential bad debts, costs of materials increasing etc. So I congratulate the OP for identifying he has a problem, now he has to do the harder part and compete at higher rates.

In my old industry of sales, I would often teach people even a monkey can give away a product, but it takes a salesperson to sell it at a decent profit. I have lost count seeing basically the same items being sold at double, treble and even five times the cost of the lowest seller, because the client had been sold the value of the product or service.

If selling cheap was the answer in business there would only be one supplier of any product.

 

[Paul Kelly ICHYB]

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

If you are buying at trade, you should be buying below retail. Keep a link to a retailer with pricing that is above your supply and charge that difference - that will at least allow you to justify thr price and let you make some margin.

you are suggesting I bin off and keep to larger jobs

I don't. Just charge the right price for all jobs!

 

[pentel]

On a different group someone uses price to regulate work flow.

If they are busy they increase their prices by 10%.

 

[Talay]

I find Clinton's post slightly disingenous and dont agree at all. When starting up a business you are on a long learning curve and just to chuck it in and 'get someone else to pay your salary' is pretty poor advice. Who is to say the creater of this thread wont go on to have a thriving business in 5 years time?

Everyone has to start somewhere in business. Nobody will get everything right, all the time; not even experienced business owners.

Ok, if he is starting out, then he is pricing too low, likely under the VAT threshold so that will kill him as you need to price as with VAT and enjoy the small advantage in the early months. You see this all the time when they ask how can they raise prices 20% (in reality 16.7%). The business model was doomed to failure from day one.

If you charge £1000 when you should be charging £3000 then mentally you cannot adjust. You'll maybe go to £1250 or £1500 and still be in the same boat and still sinking but just with less water coming in.

Going to paid work and relearning the pricing is a sound way to regain experience and initial "failure" isn't failure at all. Not learning but continuing down the same path is failure.

Lastly, this didn't sound, to me, as if it was a start up thing but rather one of a much longer time where far too low prices was historical and thus the mental capacity to upgrade from economy to business class seems impossible. You need to break that mental barrier.

Some of the best free advice I can give is to go on Facebook and onto some of the tradesmen only groups (blag your way in) and see how often the same question comes in from new members and how old hands answer the same way, don't be a busy fool, raise prices and be proud of your quality. Does it work ? No, not always because folk used to earning wages of £1000 cannot comprehend that in order to pay wages, to invest, pay taxes and all business expenses and crucially make a profit means you have to charge £3000 or even £5000.

 

[DontAsk]

You see this all the time when they ask how can they raise prices 20% (in reality 16.7%). The business model was doomed to failure from day one.

Both those figures are wrong. On the face of it, your prices need to go up 20% to cover the VAT. The VAT element is then 16.67% of the total, not the increase.

If you factor in the input tax then you can put your prices up by a smaller amount and still make the same profit. How this works out will depend on the proportion of VATable supplies in each invoice. It will be a smaller effect for someone mostly selling their services.

E.g. Not registered buy at £12, sell at £20, profit £8
VAT registered buy at £12, sell at £24, pay £2 (£4 output VAT - £2 input VAT) to HMRC, profit £10 so you either make more profit or you can increase prices by less than 20%.

 

[HFE Signs]

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.

That sound a bit defeatist - I would never give up without exhausting all options. I think some very sound advice has been given and I would like to see the OP make a success. We all understand the pros and cons of working for ourselves. This business has a future with a few changes.

 

[MBE2017]

This business has a future with a few changes.

Having run electrical wholesalers for several years in the past, I know several millionaire sparkies, so I would agree, decent trade to be in.

 

[HFE Signs]

Having run electrical wholesalers for several years in the past, I know several millionaire sparkies, so I would agree, decent trade to be in.

I think we both know, for most it's a lifestyle business - having said that I happen to know two electrical firms locally where the owners are very wealthy indeed.

 

[John Made In 79]

Be deliberate with who your targeting, market yourself better towards Person type A instead of everyone. Find their pain points and be their guy/business. Can you niche down into a specific area and charge more/biggest ROI as a specialist instead of generalist. Being a specialist gives a business and edge over another most of the time when comparing in my experience working with.