Mastering the basics of business is a fundamental step if you want to grow, and still be around in 3/5/10 years and beyond.
Many people roll their eyes when they hear the phrase “back to basics”. They’re looking for the next shiny object that promises to fast track their success. But in reality, there is no such thing.
Instead, you’re simply wasting time. Millions of successful businesses have been built before you, which tells us that there is already everything we need, all the knowledge we need out there, to build a business capable of massive success.
Mastering the basics builds a strong foundation that you can build upon. You wouldn’t build a house without the proper tools and skills. No fancy high tech kitchen installation, beautifully landscaped garden, or luxurious furniture will stop that house from crumbling to the ground if it wasn’t built well.
Every now and then, we need to check in with the basics to stop us getting ahead of ourselves. When we’re enjoying an all you can eat buffet, you’re gonna take a break to drink and sit before going back for more. Business is no different.
1. Time Management
If you only take one thing away from this article, it’s that you need to get on top of your time management. You can’t master any of the other fundamentals without a time management system in place. It’s impossible. But if you nail this, I promise everything will get easier.
Time management can be split into two parts – the to achieve (important) vs the to do (urgent). Business owners are forever saying “work’s just too busy right now, I’ll get this [insert important business growth task] when it gets quieter”. Can you relate?
Well, I can tell you right now that you will never get to that quieter time. You will always add ‘to do’ urgent tasks to your list, and that will never change. But what you can change is making the decision to prioritise the important tasks.
You do that by carving out business owner time in your diary and sticking to it come rain or shine. It doesn’t matter what urgent task pops up out of the blue. If your diary says ‘10am quote register review’, you do that at 10am.
This is what we call your default diary, and it’s filled with important tasks that only you can do, like reviewing your leadflow/cashflow forecast/utilisation, 1-1 meeting with your team, etc
Any achievements that you hope to make come as a direct result of business owner time. During this time, you review, reflect, reset so you can take the best next steps. Get your default diary in place today using our free template and guide.
2. Financial Scorecards
All your decisions should lead to activities that lead to results. Business growth is as simple as that. But are your decisions doing that? Because if you’re not seeing positive results, your decisions need to improve.
The best place to start with this is by taking the time to truly understand your key numbers. I’d place a pretty large bet and say you don’t understand all your numbers and the implications of them. So right now you’re just stabbing in the dark, with no idea what to do.
What’s worse is that you won’t even know WHY your actions have given you those results – good and bad. And if you don’t know why, you can’t replicate them for future success or fix what’s gone wrong.
Arming yourself with data allows you to make informed decisions, so you can take the right actions to give you the positive results you’re looking for. Track your key numbers and update/review them – in default diary time – every week without fail.
3. Quote Register
Your quote register is an indicator of what you’re saying yes to, and what you need to start saying no to.
You have the opportunity to escape unnecessary drama. If you go back and review and reflect on your quotes, you can quickly pick up the phone to pull out of a job before you’re chosen for a job, and stop it before it becomes a WIP.
Your quote register is the promise of what’s coming. You can plan what money is coming and going, the supplies you need, how many employee hours and resources are utilised, and more.
As with everything else in your business, you have to carve out time in your default diary to review and reflect on your quote register. After continuously reviewing, you’ll get better at figuring out what is the ideal job, at the ideal margin, to the ideal customers, so eventually you’ll get to a place where 80% of your quote register is filled with the perfect jobs.
4. WIP
Your Work In Progress is your guarantee of productivity and invoicing. Setting up effective WIP systems allows you to:
- Understand your job profitability – Understanding your labour and materials use for each job gives you a clearer picture of job profitability. Regularly reviewing this helps you find the ideal jobs with the ideal margin for the ideal client.
- Improve cash flow management – Use WIP systems to help you invoice on time and reach out to customers. We’re seeing a trend of late payment in the community, and it’s only going to get worse. Don’t wait until your invoice is due to chase a customer; get in touch 7 days before it’s due to remind them.
- Increase customer satisfaction – Tradies who deliver what they promise, when they promised to deliver it, get paid on time and benefit from repeat business and referrals. Customers appreciate effective communication and active project management. Happy customers equal more customers.
5. Gross Profit
- Understand pricing – Review how you’re currently pricing to understand where you’re making and losing money.
Again, this task needs to go into your default diary. Look at your bank account every week without fail, look at and track your numbers, and see what is showing up.
- Buying sooner and better – When you buy late, you’ll pay 70% more. Regularly reviewing your quote register and WIP means you can buy supplies at the right time, instead of scrabbling for them at the last minute and paying the price.
Also, when you pay your suppliers on time, they’ll look after you. You never know when you need a favour and they’ll be more likely to say yes if you treat them well.
- Delivering quicker with no reworks – Complete every job on time and on budget. Reworks cost you precious time and money that you could be making elsewhere.
If something happens on a job that shouldn’t, you’re not delivering what you promised. That means there’s a communication problem somewhere.
Build the Business Muscle
Mastering business fundamentals isn’t going to happen overnight. Building a business is like building a muscle – the more you work on it, the stronger it gets. You can’t expect to bench press 85 kilos if yesterday you could only do 50.
It takes commitment to work at it every day, every week, every month. You are in this for the long haul, so you’ve got to start treating it that way.
Forget about finding motivation, and make the decision to show up and be 1% better than you were yesterday. Small, consistent steps in the right direction are what you need to aim for. Do that, and you can’t go wrong.
Power to you!
Stefan Kazakis,
CEO & Founder,
Business Benchmark Group
