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Why are your margins so thin? Fatten them up – become a feeder.


I’m thinking of those strange men who feed their girlfriends until they become so enormously fat. It’s probably so she can never leave him or something and if you don’t want a fat girlfriend or wife, I really think you should want fatter margins.

All of you are in a business where lots of money gets moved about – if you’re building houses, in particular, your invoices are big…….but your bills are big too.

You’re under pressure from your customers to keep the price down and you’re under pressure from your suppliers and your employees to pay them more.

It’s like being gripped in an invisible pincer movement.

The solution is to feed those margins – keep constant pressure on your costs, charge as much as you can and don’t give stuff away.

Costs (Fixed):

Get your P&L report out and have a look how much you’ve spent on everything. I bet it’s more than you thought, especially if you haven’t looked at it for a while. What can you reduce?

Common mistakes:

Paying your accountant to do work that someone much less expensive could be doing instead – like data entry from your shoebox of receipts – send it to Shoeboxed instead.

Not reviewing your insurances – get an insurance broker to review them for you – this is so easy to do, they do it for free because they hope to sell you insurance. It’s kind of a win-win.

Vehicles – how many do you have – do you need them?

Marketing – marketing is necessary and you should be spending money but you should be being careful and making sure the money you spend is bringing you more customers.

Neglecting this means the costs creep up when you’re not looking and you can be left without much for you.

Costs (Variable):

If you use sub-contractors or manage other trades, most of you will get their quote and add your margin. When you win a job, after your client has screwed you down as hard as he can, you’ll get on with the project – give your trades the go ahead to start work.

What you should be doing is going back to your trades and asking them to drop their cost now you’ve won the job.

Try it, you’ll be surprised. Your customer did it to you, why shouldn’t you do it too?

(Jim did it to his suppliers recently, asked them to find another 2% on each contract. They did.)

When you buy materials, you can do something else. Instead of getting a quote for the project, ask your suppliers to consider how much you spend in a whole year and ask them to price based on that – you might have to commit to spending it all with them, of course. A smart supplier might give you a rebate if you meet the volume you promised (that’s what I’d do).

(John Geeves asked his plumbing supplier for a discount and they gave him 5% on the spot. He was spending $750,000 per year so that was worth $35,000. From one phone call)

Charging more is more difficult. I’ve written a little cheat sheet on it, watch out for the emails. It’ll be free, don’t worry.

I charge for coaching not for small bits of advice. I believe the goodness comes when you actually implement the advice I give and make changes in your business.

If you want your business to be different, you have to do somethings differently. That’s what I charge for – helping you do that.

Why don’t you call me to discuss what changes you should be making in your business? No charge unless you decide to hire me as your coach.

Book a 10-minute chat

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About the Author

Jon Dale

Jon likes helping business owners and especially owners of trades businesses. Life can be a bit frustrating when you run a business and a trade business can be even more so. Jon reckons this stuff is fixable and that you can fix it by making some fairly simple changes to the way you do things. In fact, he runs a free monthly webinar to help explain the process further of moving your business from manual to scalable.

You can connect with Jon Dale on:

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