Running a plumbing and heating business is hard. Together We Count are fortunate to look after the accounting function for plumbing and heating businesses of all shapes and sizes. Over the years we have identified a few key traits that separate the men from the boys or ladies from the girls. I’ve written this blog to provide you with exactly what these key traits are.
We are sharing this information so you can not only learn from what we have seen works wonders but also so you can develop your business.
The key traits are mainly tips for plumbing and heating businesses, but the traits can apply to all trades and industries.
1. Have solid terms and conditions in place.
It’s one of those things that you normally realise in hindsight. After a client has complained or pointed the finger. It’s important that you have your terms and conditions in place before that happens. Together We Count can give clients’ access to Markel Law Hub where they can download standard templates for terms and conditions.
2. Agree on a price upfront.
I find that a lot of trade businesses price on materials, plus a markup, plus an hourly rate. They’ll go to a property, diagnose a fault and repair that fault, then give the client the bill. The problem with that is often the client hasn’t agreed to that figure.
My advice would be, if you know how long it’s going to take you to replace a part or to do an element of work, all you have to do is estimate the total price and communicate this to your customers prior to doing any work.
‘That’s going to take me three hours and the part’s going to cost me £50. I’m going to charge £75 for the part, therefore, I know this job is going to be charged at X amount plus VAT.’
Give the client the quote before you act on anything. Agree on that price, get confirmation. Once agreed, the work can start, this way price disagreements are greatly reduced.
I was once told, in business, you are always going to have a price conversation with a customer. Either upfront or at the end of works being complete. When it is at the end of works being complete, it often hasn’t been agreed, therefore get the price conversation out of the way at the early stage of the job in hand.
Following on from point 2, this takes me nicely to my third point.
3. Give your client options
Give options with different prices. The golden rule on this is to always give three options: a bronze, silver, and gold package. If you give them one option, then that one option is your price, i.e., the businesses price. Two options aren’t enough for a comparison. Giving them four options is too confusing for the customer. By giving them three options, they will find the buying process a lot easier and research has found that 70% of the time they’ll go for the middle option. An example of giving options could be the following:
Let’s say a distressed customer calls you because their boiler has packed in, in the middle of a harsh winter and they need a quote ASAP. Sticking to the three options you could present your quote to offer:
- A repair to the boiler, a like for like replacement for the boiler or an upgrade to the boiler and heating system.
- A replacement with varying degrees of service levels, such as new boiler – no thrills service, new boiler – standard aftercare service, new boiler – you say jump I say how high.
- Or a replacement with varying degrees of product quality, such as a low range boiler, mid-range boiler and a premium range boiler.
Note: You should never assume what a customer is willing to pay or what option they want to go for. Often you will be shocked by what a customer chooses. I feel that preconceived ideas can often be completely wrong and often you will be surprised which option people go for.
I have found when businesses fully embrace giving people options for works, they never go back to just offering one single price. If you don’t offer a customer a premium service or premium boiler, then they often are left blind sighted as to what you can do, this means that money is left on the table. Don’t leave money on the table!
4. Get deposits
As a general rule, if you’re doing work over the value of £500, I would always request a deposit from a customer, in particular, if they are a brand new customer. Going back to my previous points, where you’re giving a client a price upfront, they already know the price. They’ve agreed on the price, they’ve selected an option, you now have the power in your hands, the customer needs you to make a repair, therefore, resume control of the relationship financially, by obtaining a deposit to secure the works installation date. The deposit can just cover materials if need be, but I find that plumbing and heating businesses that obtain deposits have much better cash flow than those that don’t. Your peers are getting deposits, why aren’t you?
A lot of people/customers don’t like parting with deposits because the work hasn’t been done and therefore they’re paying for an element of it upfront. It’s the big ‘unknown grey area,’ entering the unknown and the ‘oh God, what if this messes up?!’ can be daunting.
In order to alleviate that worry in your customers’ eyes, I think it’s very important that you offer promises and guarantees.
5. Promises and guarantees
You can have simple promises like a ‘turn up promise’;
“I promise I will turn up to your property to do the work on the agreed date”.
You can also guarantee your work.
“We guarantee the work that we have undertaken for X number of months/years”
This reassures people that you are a firm of your word and promise, this will help you stand out from the crowd. Clearly communicate your promises, show people that your business is upstanding.
6. Do a f**king good job!
It’s very important as a trade business that you do a good job, that you deliver on your promises, that you turn up when you say you’re going to be there, you are respectful of people’s homes, their pets, their family, their life. Use dust sheets, clear up after yourself, refer to them as Mr/Mrs., take your shoes off if possible or at least make sure they are spotless on the outside or where then funny shoe protectors things.
Just do a f**king good job!
By doing a good job customers will return. Think of your tomorrow’s business. When you go to a customer’s house, how can you conduct yourself to ensure that you’ll be invited back to do another job? Literally, say this to your team or yourself if you’re a sole trader. ‘How can I/we conduct ourselves to ensure that I/we will be invited back to do another job.’
This way of thinking could open your mind to think of wonderful things to ensure that you serve your customers better.
7. Save money for taxes and growth
My number one rule in business is “your money is not your money!” There’s always someone in business that needs paying; a supplier, a tax bill, a marketing campaign, that brand new tool. There is always someone or something that needs your money. Don’t spend more money than you’ve got. You need to save for taxes as you go. Often businesses get caught out and they’re not sure how much to budget for taxes. My general rule is, if you’re taking money out of the business you need to save as you take money out.
If you’re taking money out of the business, you’re probably taking the profit out of the business, you’re going to be taxed on that profit. If you’re being taxed on that profit then you need to save for that tax.
For personal earnings, known as drawings being withdrawn from your business, you will need to set aside 25% of what you are taking out. Here’s an example: Instead of paying yourself £1,000 you actually need to pay yourself £750 and transfer £250 into another savings account which is going to be saved for corporation tax and tax on dividends (If you are trading as a limited company). This is a general rule. Save as you go!
In regards to saving for VAT, set aside 10% of total bank receipts (this is for a standard domestic service and installation plumbing and heating business). Put it in a savings account, don’t think about it, don’t touch it until your quarterly VAT bill comes along.
If you would like to know a specific amount of money to save each month for your taxes and VAT, please contact Together We Count.
8. Don’t be afraid to reach out for help.
I’ve found that business owners that are open to listening to their peers, take on board and execute the teachings from various mentors, see massive improvements in their operations, Don’t be afraid to listen to other people, those who have been there and got the t-shirt. Everyone has a different perspective on business and the best way to do something. Ultimately, I feel that business is a constant journey where you’re learning new things. Some of the things that you learn might be relevant at different stages of your business’s development.
Having a business mentor can be costly, but so can diving into something new, without thinking about all avenues or discussing ideas in an open environment.
Would you rather spend money on advice or lose money on a sinking ship? I know what I would rather and it doesn’t involve getting wet!
Surround yourself with a solid network of key persons of influence within your sector, have an open mind to see the wood from the trees and block out time in the week to work on your business.
9. Horses for courses
Stick to what you know. Do what you can do and don’t do what you can’t do. Utilise other people’s skills to ensure that you can hyper-focus on the areas of work which you can do and you can be highly paid for. If you’re no good at doing the admin work hire an admin
assistant. Hire someone who can eat data, who can do all the elements of work that you don’t want to do. If you’re no good at answering the telephone or at customer service, don’t do it! Hire Karen to do it!
Obviously, your business needs to be financially able to do that but even though you’re spending money, you’re saving because you’re not doing the job. Someone else can do it better, do it faster and more efficiently – therefore let someone else do it so your business can grow its capacity.
10. Systemise everything
By last but by no means least, have a system in place for EVERYTHING. Well written systems, processes, standard operating procedures (SOP’s), templates and guides will ultimately lead to a business that runs itself, not a business where you, the owner, try to do everything and burn out rapidly. Embrace technology and adopt customer relationship management (CRM) software, link this to an accounting software (preferably Xero – not Shitbooks, I mean Quickbooks!)
Imagine a business that runs like clockwork whether you are there or not. It is possible and I have a tool to help you get started. Have you heard of Notion? Notion is an all-in-one workspace application that is fully customisable to suit your business needs. It can include databases, spreadsheets, images, systems, tables, charts, calendars, checklists and MUCH more! I use Notion for my own business and it has proven to be a great way for my team to access everything in one place. They don’t have to re-invent the wheel every time.
I have put together a business dashboard template for plumbing and heating businesses which can be customised as you like. It is to show you how introducing a tool like Notion to your business can provide a smooth customer journey that will be the same regardless of who is delivering it.
It’s a great place for new starters to get to know what you are all about and it is a great way to support your staff in making decisions.
I update it regularly and share updates on a monthly basis.
If you would like to hear more about it, please contact me and I would be happy to show you.
In addition, I have written a book called The Quote Handbook, which you can find on Amazon here or from Williams Plumbing here. A lot of the key traits mentioned in this blog are explored in greater detail within the book such as:
- Agreeing on a price upfront
- Give your clients options
- Get deposits
- Promises and guarantees
These are just some of the key points in business that all plumbing and heating business owners should be told from day one.
If you need help with any of the above, please do not hesitate to ask.
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If you would like to discuss this information any further, please don’t hesitate to contact us.
01273 569088 0114 400 0119