We spoke with successful, industry experts who share their insights on the common barriers to growth that electrical contractors face.
Goal setting and planning is all about deciding where you want to take your business and joining the dots to get there.
Brooke MacGregor, successful business owner and Managing Director at Genergy Australia, says, “without clear goals and a strategy for how you are going to achieve them, the business will flounder”.
Spend time working out where you want your business to be in 1 year, 5 years and 10 years. Then, work out what steps you need to take today, next week and next year to get there.
It can be tempting to follow immediate, short-term opportunities when starting out. The problem is, these opportunities often don’t align with where you want to take the company in the long-term.
Malcolm Richards, CEO of Master Electricians Australia, says this is a trap many electrical contractors fall into.
“For example, I recently spoke with a business owner who has a unique skill set as an accredited hazardous auditor. He had goals for his business to specialise in commercial hazardous auditing. Unfortunately, he took many short-term, residential jobs. Four years into his business, he’s only done a small number of hazardous auditing work and is not making as much money as he could be. By not operating in alignment with his goals, he has done a disservice to his business and hasn’t achieved the growth he desires.”
How you think and act can be a massive barrier to the growth of your business.
“Those who think they will only ever be a sole trader normally are, and those who have ambition and confidence in the growth of their business, usually succeed”, explains Malcolm.
“Be confident that your business will be a success and surround yourself with others who share that mindset. Having a business coach or mentor can help steer you in the right direction and give you confidence.”
When an electrical contractor has a limited customer base, they are exposing themselves to a lot of risk and reducing their ability to grow.
“The temptation can be strong when you’re working to grow your business and a builder gives you a big opportunity where the work seems to keep coming. But it can all come crashing down when the relationship changes and the builder gives you the flick. Then, you’re back to square one, having to rebuild your business”, explains Malcolm.
Don’t become content and reliant on one big customer. Have effective marketing in place and keep your customer base diverse is what will contribute to your growth and reduce the risk involved in having one main customer.
When business isn’t going well, an appealing short-term fix can be to drop the price. This can lead your business towards a downward spiral.
Often, when electrical contractors drop the price, it hasn’t been calculated correctly and taken into account all that’s involved in delivering the service. You can end up working for negative, which can lead to significant cash flow issues.
Brooke thinks businesses can avoid the price drop pitfall altogether by retaining good quality customers.
“Make sure your business consistently offers value and exceptional customer service, and you will retain good quality, repeat customers. Let your competitors have the customers that are price shopping”, says Brooke.
Not having the right systems and processes in place can make it much harder for a business to grow.
Systems and processes allow you and your staff to perform repetitive tasks in a strategic, effortless and, often, automated way. It’s what enables your business to run smoothly and enhances productivity, providing foundations for growth.
Electrical contractors can implement systems and processes for a variety of business activities, including managing leads, quoting, safety, ordering, marketing, and accounting.
“Without systems and documented processes, a business will fail to grow independently of you. You probably already have a few dependents, don’t create another one”, explains Brooke.
As you plan to grow your business, you’ll need to consider the hurdles that you may encounter along the way and account for them.
“Electrical contractors carry double the risk of other trades and must implement preventative measures to protect their business”, says Malcolm.
Malcolm suggests ensuring you have the right insurances, sturdy contracts, safety systems, and warranties in place. If you aren’t sure where to start, there is help available.
Growing a business doesn’t come without risks, but it’s how you plan for them that matters and can save your business.
Preparing for growth from day one will certainly put you on the path to achieving your business goals. But what will drive your business forward is being prepared for the barriers and challenges that you will, inevitably, hit along the way. The Master Program from MEA gives you access to industry leading advisors, to ensure you and your business are set up to be safe, profitable and sustainable. Find out more here.
Build. Grow. Master your business with the only industry program providing step-by-step support to setup and grow an electrical contracting business.