In today's blog, I am going to answer a couple of questions from one of our podcast listeners Annette, who I'm very grateful to hear from. She asked me if I would share some information around how to set up a trade business from scratch, and also, in terms of the trade business in-house marketing: what works, what doesn't work.
In my bookkeeping practice, our specialty is trades and professional services. I've been running my practice for 14 years, and I've seen a lot. I work with highly successful trades, and help them actually corner the market for what they do, which is wonderful and very rewarding to be a part of.
And, I also work with tradies who are struggling a bit more.
And so for me, it's really amazing to be able to see the different nuances and what everybody's doing. And today, I'm going to give you three things that I have observed in the most successful clients I'm working with, along with a whole lot of stuff.
So, let's talk about setting the business up from scratch first. In terms of the businessy stuff, if we put the marketing stuff aside, something that is really important to consider is that
the choices you make today will influence
what happens in 10 or 15 years.
Literally as I write this, I am so busy with a purpose and legacy project, but at the same time I've decided to sell the family home. It is not ideal timing, but the choice that I make today while the market is strong and we're probably in a property bubble, will impact my financial position in 15 years to come. So the moral of that story is that every day, the choices you make at the beginning are going to give you results in 10 and 15 years, okay? Because you'll blink and you'll have had your business for 10 or 15 years. (I've had my bookkeeping practice for 14 years!)
In terms of the businesses stuff, the first thing I would say is to
see a great accountant
– and we can certainly refer you to one. In fact, anything you read here, we can help you with some of the things, or we can refer you to vetted suppliers. Just drop me an email, tell me what you need and want, and I will send you information.
On top of that, at the very beginning,
go for a trade business structure that minimises risk.
I'm going to call this "making a plan B at the beginning".
We see tradies that grow quickly and bring on staff and start doing bigger jobs, and without meaning to, some of them end up in debt. What you do at the beginning will influence how that debt could be dealt with, and you may think that'll never be made, okay? Or, just asset protection generally. Please, please, step one, see an accountant, or ask for a referral and talk about a trading structure that minimises risk.
Now, I know that when you think about starting your own business, you think about freedom and lifestyle and not working for anyone. I know it's uncommon to think about a trading structure that minimises risk, so please put it on your list, sort it at the beginning.
The next thing is
do get all your insurances in place, and register your business name.
If you're in Australia, that's with ASIC – you just go online, it's easy.
consider whether buying a franchise is a better option for you.
I want you to read a book called the E-Myth by Michael Gerber. That's going to help you understand why it's worth just doing your due diligence, and investigating a franchise.
80% of businesses go bust in their first five years, whereas with franchises, the franchises that go bust are usually in the single digits, meaning under 10%. And now, there's good and bad franchises out there, but there is one in the trade space that we've got experience with, and we've heard really good things about. If you would like a referral to them, just to consider whether that's an option for you, let us know and we will refer them to you.
Now, let's imagine for a moment that you are not buying a franchise.
Say you've got to do this from scratch – there is actually a few common mistakes that we see business owners make on this. One is that, they don't understand that from inception they need to have up-to-date, accurate accounting records, and then they need the help to understand what all of that means so that they can see how their business is actually performing from day one in terms of profit and cash. That is the profit and loss, the balance sheet, and the accounts receivable, the accounts payable – and that probably leads me into I have a five-step system around the business operations: Plan, Team, Marketing, Selling, Standards.
And so it starts with plan, and there's a few things in there. There's your Brand and your Marketing playbook. You need your Pricing strategy, you need your actual Plan on a page, all right? So there's those things, but the second one is Team.
Why would Team come before marketing? That's because if you try and hit the football field by yourself, I don't care how good a football player you are, if you try and win that game all by yourself, you're probably going to lose. That is why 80% of businesses go bust in their first five years. I know a really great business coach, and he says the first person you need to put on your team is a strategic bookkeeper.
So we've had a bit of a look at the basics around the businesses stuff, now we are going to look at the question that was posed about marketing for trades: what works and what doesn't work. And, we're going to touch around socials versus old school marketing, etc.
The three things that I've noticed on this is
partnerships and marketing,
making the hard decisions (wear the manager hat and wear it well),
and pricing strategy.
Most successful entrepreneurs I know in the trade space are linked to other trades. The tradies that are struggling and are just busy and working long hours and scratching their head around why they're not really making more than these days, they tend to be getting those things wrong.
In terms of marketing: what works, what doesn't work – starting out in business, the first thing around marketing that you need to do is nail your brand and your marketing playbook. Your brand is your organization's personality, just like you have a personality. A lot of business owners think of brand as a website and a logo, but actually, they are brand assets. And, if you race off and create brand assets before you truly understand the brand that makes sense for you, then they will not nearly be as impactful.
Your digital ecosystem, your website, your social media, will not connect to your audience, your prospective customers, nearly as well as it could if you develop your brand first. Now, I have got all that inside the Better and Business Academy. I have got a course on building your brand and your brand playbook, and so if you would like to discuss getting access to that, just let me know.
Putting out your brand will be like the foundation of your house. It'll give you a foundation from which to build success around the marketing, and think of the brand assets like furniture that people are going to walk in and sit on. In terms of socials and new school versus old school, look, these days people expect to be able to get to know and trust you 24/7 online.
Think about your own behaviour.
When do you go looking for what you need and want?
Sometimes it's nine o'clock at night in bed on your phone, okay? So yes, you absolutely need to have a great digital ecosystem, but I'm a big one for simple, simple, simple. So I would love to be able to help you develop a beautiful, impactful, simple brand and marketing playbook that you can use as a brief for marketing agencies. And remember, we are in a global workforce these days, so we can be working with anyone from around the globe to develop your brand assets because when you develop your brand assets, which is primarily your website and social media, what you need to know is there is a marketing agency mix required. And the very basics around that marketing agency mix, because marketing is a range of specialties, is you need a graphic designer, you need a website designer, you need a marketing copywriter, at least.
The best advice I can give you here is
do the work around nailing your brand and your marketing playbook first, before you build the brand assets.
Because as the saying goes, "Give me six hours to chop down a tree, I'll spend the first four sharpening the axe" – that is sharpening the axe. The brand assets will come easily if you develop the brand of the marketing playbook, and no one can really do that for you because your brand is actually going to come from you and your heart, and the reason you're going into business. Good news is, we've got that all for you in the academy to nut out. So yeah, if you need to do that, just reach out.
And, if you're not going to use the academy, then you just need to know that needs to be done, okay? So if you find somebody else whose vibe is your vibe that can help you develop your organization's personality, your vision, your mission and more and your marketing playbook, awesome – but please know that needs to be done like the slab of your house.
So next, as a tradie, you are doing local work. So I want to explain that. As a bookkeeper and a business strategist and a strategic bookkeeper and a coach, I work with people all over the country and all over the world. I help other bookkeepers to thrive in practice as well!
I work with people all over the world because my services, I don't have to drive to their house and deliver it. As a tradie, you are generally going to residential and commercial premises, therefore you're running a local business and oftentimes, we just don't stop to think about this.
So the kind of marketing that's going to work for you is a little bit different to me. We're both going to need to be able to give our prospective customers and our market a place to go online 24/7, to get to know and trust us, but there's going to be a few nuances that are different. For example, in my business, I would not bother getting my car wrapped the advertising wrap on a car, but for tradies, I'm told that works brilliantly.
I like to structure marketing in three different ways – you've got brand, you've got advocacy, and then you've got paid. So vehicle wraps give you brand and advocacy. People are seeing your brand, and your brand is simply going to get stronger in the market. And then advocacy – when that vehicle wrap is done off the back of you developing your organization's personality, your marketing playbook, it's going to be something that connects people who see it to your why.
And people don't buy what you do, they buy why you do it.
So with the right marketing in place communicated on your vehicle wrap,
same with your digital ecosystem, you can actually
build advocacy for your brand with your market
and your prospective customers.
Now, a really simple example of how that works: let's say you're listening to my podcast and you don't do business with me, but you tell a friend about the podcast and you say, "it's really awesome, you should listen". You run a business, you are not a client, but you have seen and felt some value and so you go and advocate for me. That's a really simple example. Another one for a tradie would be that, I happened to hear about a tradie that was amazing and my friend then told me they needed an electrician and I say, "Sally told me that Josh is so good and he's just got five star reviews."
We can absolutely create advocacy in our market, as well as with the obvious, which is clients we work with who rave about us. Marketing layering – it creates a pipeline for you. For example, let's say you have 12 different marketing strategies and basically through those strategies, inquiries coming through from each one, then that's going to fill up a pipeline for you. I'm big believer in marketing layering, and just an example of that is that you've got your brand, you've got your marketing playbook, then you create your digital assets being your website and your social media. Website is a marketing strategy, social media is a marketing strategy.
Let's say that you are making sure you remind your broader social network,
like your personal network, who you are and what you do. That is
marketing strategy, which is part of networking,
and is really, really important.
So that's number three.
Let's say on top of that, you're making sure that you
get your database built and in order, and you keep in touch
with everyone you do work with so that they know who you are, where to find you, and they reach out to get more jobs done. That's database marketing – number four.
Let's say you do business networking and partnership marketing,
that's five and six.
Then, you've got word-of-mouth marketing at place. So that's the advocacy we just talked about. There's profile marketing, results-based marketing (be sure to build your Google reviews!), Search Engine Optimization (SEO) marketing. There is also paid marketing, and I truly believe that it is the layering of these things that works. However, I'm also a believer in keeping it all simple and doing the 5% activities that will give you the 95% result.
So absolutely, you need smart strategic strategies, but I'll give you an example of what I mean with your social media. Social media is somewhere that your market will go to get to know and trust you. And so, understanding the customer journey is really important. In terms of social media, I would not recommend that you put a whole lot of effort into that. It's more where somebody will go to vet that you are credible, to get to know and trust you 24/7 online. What we need to do is have our marketing strategies in place, and then understand how much time and money to invest in those marketing strategies.
The strategies that I just told you about there, you should be doing, but, you should be investing the right amount of time and money in those. So with organic social media, you're probably not going to monetize that into clients that easily and therefore, you want to invest the time in it commiserate with the return. Your social media is probably a branding exercise, and you don't want to spend hours and hours and heaps of money on that. You just want to make sure that when somebody's checking you out, that you're posting regularly, and you look professional and you look credible and you look reliable, and you've got reviews and I can get to know, I can trust you, and it seems like you have a competitive advantage.
You always need to look at the time and money you put into any marketing activity, and then think about the return on investment for that time and money.
Like the vehicle wraps – you do it once, you reap the rewards. Not much time, not much money, and yet the results will keep coming as part of marketing layering.
So the three things that I talked about: partnerships, making the hard decisions (which is around manager hat primarily), and pricing strategy.
In terms of what works: partnerships and advertising, these two things for tradies and for every single business are a must. They're transformational, and they are the 5% activities that will give you 95% of the result.
What doesn't work: paid advertising. It absolutely does not work if you are not ready. Paid advertising only works when you have nailed your brand, when you have nailed your marketing playbook, when you have nailed your website and your social media, and when you understand the science and art of paid advertising on the whole. Sadly, I see business owners absolutely burn money on paid advertising. That doesn't work, and yet, it can work and it does work.
We actually do have a supplier we know who does paid advertising for trades in Australia. They get great results if and when you're ready. The thing I like about them is they won't actually work with a client who's not ready, and they love us because we get that. So they will say no to you if it's not going to work for you, and I'm telling you, they'll tell you exactly what I've told you. So please, do the foundational work. But if you'd like that referral, just email me and I'll give that to you.
Now, partnerships. Networking. I love Business Networking International, BNI. I know people love it and some hate it. I've seen and tried different types of networking. What I love about BNI is it's so systemized and if you work the system, the system will work, okay? I have met the founder, Ivan Meisner. He's amazing. He is an introvert. The grandfather of networking is an introvert. So whether you are an introvert, extrovert, just follow the system, and the magic will happen.
I've seen trades build hundreds of thousands in revenue through Business Networking International. I will tell you right now, if you focus solely on revenue thinking that that's what builds a thriving trade business, you will fail. It's a piece of the puzzle. And so I'll direct you to The 7 Deadly Cashflow Sins, and just to generally reach out. I'll do a free consultation with you on this, but The 7 Deadly Cashflow Sins explains a little bit of that, as well as Michael Gerber's book, The E-Myth.
Before we talk about partnerships and networking, I'll just mention one more thing. Time in the market. The first five years are the toughest. Now, if you hit the market from day one with a brand that you've really invested in getting right, okay, then the first five years is your brand kind of taking root in the market, and that is something that is going to be kind of invisible, just like your pipeline is invisible.
In your first five years, you want to let your brand take root in the market and work your ass off. Please work smart, as well as hard. But I just want to mention time in the market – when you get to the five year mark, and I promise you, if you've done all the things right, do everything right every day, every day, for five years, and let my team help you with that, then absolutely, things will get easier.
Some people will tell you it's the first two years. Sure, that's a part of it, but I've seen the data on the curve that happens, and I've experienced the curve as well at five years.
Going back to the three things that I've seen that work really well with the most successful entrepreneurs in this space – rather than thinking of marketing as a one at a time approach, aka go out and find one customer at a time, the successful tradies found partnerships. They found people who had lots of their customers that they could serve. Real life examples, a tradie that discovered that corporate managers could refer him the most work. So, he put his time and energy into working that marketing strategy, into getting to know the corporate managers and letting them get to know and trust him, and nurture those advocacy relationships, so that he could get referrals from that.
Another example is an architect who built relationships with volume builders. Now, success is found in the long game. You need to be prepared to play the long game with all of this. So when you get started,
it's not going to happen overnight, it's going to happen over time,
and we would love to hold your hand and help you with that. Everything begins and ends with the numbers too. So please, do put a strategic bookkeeper on your team.
And then, I would refer you to Daniel Priestley. I've read all of Daniel Priestley's books. They're great business reads, and he talks a lot about this in his books. So if we circle back to business networking, look, there's nothing else I need to tell you there. Business networking works, but in my experience, BNI works the best and I have seen trades absolutely kill it.
If you work the system and you go to networking primarily to
find a partner more than a customer,
you'll absolutely find tonnes of customers trade categories are coveted in BNI and they're fought over. It is so powerful. But, you also go to find a partner.
Let's say you're a plumber, and you find a great electrician partner, you might be able to refer to each other. Now, they might've been in business for 15 years and be able to give you more than you can give them initially, but there's always a great value exchange that can happen beyond just referring to each other as well. So you'll have lots to give, alright? But that's the link between partnerships and business networking – that the networking is where you can find and develop some of these partnerships.
Moving on to making the hard decisions, and wearing the manager hat. Well, my goodness, when you first go into business for yourself, absolutely you will think, "Yeah, that's easy. I'm excited about not working for the man and doing my own thing." – you'll never conceive the hard decisions that you are going to have to make.
So from the beginning, you need to know that the manager hat is plan, organise, staff, direct and control. Recruit team to help you. And when I say recruit team, I mean globally, and people that just help you an hour here and there, like a strategic bookkeeper. I don't mean full-time staff, I mean subcontractors and technicians that do what they do well to support you. Hire slow, hire fast, make hard and smart and tough decisions. The business owners that are succeeding are doing that. The business owners who are failing are telling me why: they're not prepared to make the hard decisions.
The third thing is pricing strategy. An example, one highly successful tradie, he has always had a great pricing strategy. And a great pricing strategy isn't just an hourly rate, that's a math equation. You need to develop a great pricing strategy, and then regulate capacity with price. You need to charge what the market will bear. All too often are tradies charging a fraction of what they should charge, alright? But just know that the people that are getting it right are really killing it around pricing, and pricing is contained in the plan part of that five-step methodology I told you about. Feel free drop me a line if you want to talk about how I can help there.
So the business owners that are getting that wrong: they're not charging what the market would bear. They don't have a great pricing strategy. They're not regulating capacity with price. They are busy, busy, busy, but not thriving. When you go into business for yourself, absolutely, you want purpose, you want legacy, but you also want the income and lifestyle – and that pricing strategy is about giving you money and also time. You want to be money wealthy, but you also want to be time rich. You don't want to work 70 hours a week and go, well, I made good money, but I hate what I'm doing and I'm losing my bridge and I have no time. We want profit, cash, and time. Keep your eyes on the prize.
Now let's wrap it up with action steps. One, print that out this blog and please use it as a how to guide as a checklist. The next action – successful business owners are educating themselves. So make time to listen to every one of my podcasts while you are exercising, or on a walk. Educate yourself, okay? They are the two things that I recommend you do right now. And, as I've already said, just drop me a line if you'd like to talk about how we can help, or if you'd like us to refer you to anyone and we will do that for you.