“How to increase the capacity of your trades business without taking on too much stress.”
At some point, in order to grow a trades business, you’re going to have more people doing the work. That’s how you grow a trades business. You have more people doing more work and you take your part of the money you charge out for them. It’s important so it works profitably.
In this short article I will talk about improving your operations, systems, processes, and your ability to delegate . Your people should be able to do more work, without needing so much supervision, without making so many mistakes. Get this right and this will affect your capacity. It’s going to improve your capacity when you do that.
The issue of capacity
An issue that everybody comes up against is this issue of capacity. You’ve got so many people, your capacity is limited by the number of people you’ve got. They can only do so much work, can’t they?
I’m a business adviser for trades business owners who want to grow and scale. I’m all about structure and systems and building that beautiful business that’s systematised and structured. It need to works without you having to be there all the time, because that’s a beautiful and desirable thing in your business.
When your business is systematised and works on its own without so much input from you, it’s much less stressful and it’s much more profitable, and that’s what we all want.
If you don’t have enough capacity to do more work – the work you’re finding with your marketing and your sales, it’s hard to grow and it’s hard to take on more work. I find people struggling with this a lot.
Its the Chicken or Egg question. Which comes first?
“If I do that, I won’t have enough people and it’s going to be hard,” and a lot of people worry about that. And that is understandably so because taking on a new person is a reasonably high-risk activity. It’s $60, 000/$70,000 a year, plus cars, insurances, super, tools, etc. It’s a lot of extra money for you to take on as a cost without knowing that you’ve got that extra work.
That’s a particular issue if you run a larger project. If you’re a project trade and you run larger projects, like a plumber for builders, your work is lumpy and difficult to predict. You can think you’ve got two projects starting next week, but then they’re both delayed by a month, and then you’ve got no work for a month for all your plumbers. That’s particularly scary for everybody.
A sudden increase in your capacity but no work is a terrifying thing. I know you often manage this by scheduling jobs and shuffling, and juggling, that’s what you’re good at. In fact, you’re much better at it than I am. That’s not something I’m skilled in and I know that most of my clients are skilled in that. It’s what they do every day. And that only goes so far.
At some point, if you’re going to have them all work, you need to have the capacity and it’s difficult to know which comes first:
- “Do I do the marketing and sales and get the work and then hire people?”
- “Do I hire people and then do the marketing?”
And of course, the answer is to juggle, to do a bit of both at once.
How to increase your capacity
1. The best way to increase your capacity is to hire permanent, full-time tradesmen and women to become part of your team and have them become included and involved and build a culture as a company and as a team and as a group, and all that lovely stuff.
They’re the best people to have on your side and the reason for that is that you’re looking after them a bit by paying them super and holidays. You’re making a commitment to them and you can expect a bit more commitment from them in return. But like I said, that comes with some risk and it’s a bit scary.
So how should you grow?
a. I would say, hire full-time employees first and work with my team to work hard on the marketing and the sales to make sure you’ve got enough work for them.
b. Make sure you have got money and a bit of a buffer so that you can manage through and not stress too much when it is a bit quiet. It will be from time to time, especially, if you’ve got lumpy projects. But if you can afford to manage through that, that’s the way to go. You will have fewer headaches. You’ll be able to invest in your people. You’ll expect investment back. Things will be better.
That can be scary!
2. If that’s too much risk for you or too scary for you, the other option is, of course, to use subcontractors.
Lots of people I work with have been very frustrated about hiring subcontractors. The quality is low. The care factor is not quite there, and it’s been a disappointing experience. I’m thinking of a few of my customers in particular, who’ve made statements about this.
I know other people who rave about subbies. It’s not always true but the temptation is there because when you use a subby to do a job, you can:
- Get them to quote the job rather than pay all
- Pay them by the hour
How to manage subcontractors
These take some of the risk out of how much you pay them so you’re not worrying about how fast they are. And it’s tempting to imagine that you’ve hired competent professionals and they’ll behave competently and professionally on your job and often and they don’t so much.
And my answer to this is: whether you hire a subcontractor on an hourly rate or a subcontractor on a price for the job, or a company and their people for a job, you’re still hiring people to do work and it’s really the same as with an employee. You still need to:
- Have the systems documented
- Tell them how you want them to do it
- Want them to do it your way
- Manage them and motivate them
- Manage the outcome that you want and make sure they deliver it
And what too many people do is imagine that a contractor is something different than an employee. They’re giving the work and saying, “Do that” and then they go, “I’m disappointed with the outcome I got”.
If you’re using a subcontractor to do some of your work, there’s a useful way of managing that period in between this number of employers and an extra employee. You can have a half one or a part one or a job-based contractor but you must also invest in managing them and their jobs just like you would if it was a full-time employee who you felt more responsible for.
So that’s the tip.
- Manage them properly
- Instruct them properly
- Give them planning notes and procedures to follow and a checklist to use
- Manage and supervise them just as if they are an employee
Have a good day!
They’ll resist it but if you use the same contractors all the time, and build a relationship, and have them as your overflow people as you grow and give them consistent work, you can build a relationship, and you can manage them properly, and you can expect to get good outcomes.
Invest the time and the effort and you’ll get the outcomes you want much more than if you just get them to work and you imagine that paying them for the job means that they’re going to do the job well because if it doesn’t mean anything then it’s just hanging a peg.