We get it, life is expensive and running a trade business doesn’t make things any cheaper. In 2023 with rising costs on all fronts, it’s becoming increasingly difficult to keep your prices down. However, there are steps you can take to mitigate these costs.
The first thing to do is to consider putting your prices up (we wrote a handy article on price increases outlining how and why you should do this) but after that, working out what to do can be a challenge.
The good news is, we’re here to help.
There are some simple easy to implement steps you can follow, that will help you keep your costs down. You don’t have to implement all of them, but even making a few small changes can make all the difference.
Okay, we appreciate this is quite a generalised thing to say, but hear us out. One of the biggest expenses for any service business is the cost of the materials you use. Much of this expense can be shifted onto the customer, but in the current market, as prices change rapidly, that isn’t always so easy or desirable to do.
To mitigate this we suggest getting creative with how your source, purchase and sell your materials. If you spend more time shopping around for different providers and look at buying in bulk or have your customers pay directly for materials, this could help save you a considerable amount.
For a more detailed look at managing your materials to save money, check out our blog on how to manage your material costs.
For any business that’s on the move a lot, fuel cards are a great idea. The concept is very simple, cards can be given to employees at a business and are used to pay for fuel at a pump.
The cards only allow for fuel purchase and can be used to track how much fuel any employee is buying, where they’re purchasing it from and how often they’re filling up. The expenses are billed directly to the business providing you with HMRC-approved invoices that save you time on admin.
You can also gain additional savings by signing up for fixed weekly price fuel pump cards. These can be used to save on costs by charging you a fixed price for fuel per week.
This means when a fuel card holder visits a fuel station, even one with higher prices - such as those found at motorway stops - the cardholder still pays the fixed rate. When used effectively a business can make significant savings by using these cards.
Furthermore, by using a card, you have more transparency across your business and are more easily able to see where your expenses are incurred and work out where you can look to increase efficiency across your business.
And if all else fails, you could always just get on a bike - like this guy.
If there’s one money-saving tip to take away from this blog, this one is probably number one. The right job management software can have a massive impact on your service business, saving you time and money and increasing your efficiency.
So how does it work?
The basic principle is about cleaning up your admin and automating your processes. Amongst trade businesses, so much time is wasted completing admin tasks such as designing quotes and invoices, tracking expenses and coordinating your team of tradespeople. With job management software all that is tidied up.
You can manage all your admin from one platform and set up automations that complete processes automatically, such as sending out communications to customers and reminding them about repeat jobs, like a yearly boiler service.
It makes a massive difference.
If you’re not already using a job management software, check out Payaca, we’re a UK-based company that offers the best in job management tools.
The idea with this one is about using clever ways to advertise your business.
It can be really costly trying to put money into advertising, however, it doesn’t need to be. By advertising smart and using some clever techniques, you can promote and grow your business at a low cost (in some cases even for free) and bring in increased revenue.
The van example is a great place to start. If you drive a van to get to your jobs, that is a great space that is publicly visible, where you can promote your business. Get your logo on there, add a phone number and a website, even include some one-line testimonials. If you wanted to be really inventive why not add a QR code that people can scan?
Your van is a billboard just waiting to be used.
And on a smaller scale, a service uniform works in the same way. Have your company name on the back of your shirt and show off your logo. If you're interested in finding out more about this method we wrote a blog covering everything you need to know about the benefits of a uniform.
Both a van and a uniform provide spaces to promote your brand and it doesn’t cost much for you to make use of them.
Another one that should be easy to do. You can claim the tax back for certain expenses such as the cost of uniforms, fuel for work and an office phone (find the full list at GOV.UK), allowing you to save money on costs.
Make sure you check the details on which expenses you can claim back on. There are certain details around the technicalities you should be aware of, for example, you can claim back on the fuel you use to travel to a job but you cannot claim on the fuel used to get to and from work each day.
Check the GOV.UK website for details.
Taking on an apprentice is a really good idea for any growing trade business. Not only is it a very cost-effective way of expanding your team, but it is also a great long-term investment that allows you to take on-board new employees who you can train to your standards and preferences.
Training an apprentice won’t set you back financially, with the National Apprenticeship Service covering 100% of the training costs for new apprentices aged between 16 to 18. If the apprentice is between 18 and 24 financial support goes down to 50% and at 24 or older the National Apprenticeship Service will pay 40% of the training expense.
When it comes to salary expectations, costs are also lower. Apprentices don’t demand the same salary as fully qualified and experienced tradespeople, furthermore, they are usually motivated to learn and improve quickly meaning they can operate at a high level of competency and offer a lot of value to your business.
Check GOV.UK to find out how you can hire an apprentice.
The principles of operating an environmentally conscious business are synonymous with saving money. Being green is about being energy efficient, and increased efficiency reduces costs.
Consider which parts of your business could be more energy efficient. Are you turning off lights and appliances when you are not in the office? Could you be using an electric vehicle rather than fuel power? Are you making an effort to use reusable materials and tools where possible?
One plumbing business in Bristol is really taking this to the next level by using electric bikes to travel to their jobs. You may not want to take things this far, but there are certainly opportunities to save money by being smarter with your energy usage.
So that’s it, 7 top tips you can apply to your service business to save money on expenses.
If there’s one thing to take away from this blog, it’s that there are simple steps you can take to save money. Even spending half an hour at the end of the day reviewing your processes and considering your costs will make a significant difference. You will find there are considerable savings to be made without making massive changes.
Work smarter not harder and reap the rewards for your trade business in 2023.