How to manage finance in your electrical business
You started your own business to make money. But the ins and outs of managing a business’ finances is new ground for most people coming off the tools.
Making sure your business is profitable should be the first priority for business owners. But you need to understand where your money is coming from and where it is going to get to that point.
It is important to know that your charge out rates are up to date, you are tracking your money coming in and going out,
Understand your finances
Do you know how to manage cash flow, budgets, invoices, and payments? Making money is why you started your business, so understanding finances should be a priority.
Mismanaged cashflow and financial mistakes are the cause of too many small business failures. It is imperative to plan properly, set realistic expectations and keep track of costs.
READ MORE: Why many electrical contractors fail within four years
Without understanding your financial situation your business simply will not survive. Financial software helps you understand the money coming in and going out. But they can also help you understand your cashflow, work out your most and least profitable jobs, and establish your tax obligations.
Set your charge-out rates
Knowing what to charge is difficult. It is far from just looking at arts and the time a job will take to finish. What you charge needs to take into account a range of inputs including the bills your business is paying, you and your staff’s wages and superannuation, as well as parts costs and, importantly, a profit margin.
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While MEA cannot tell you what to set your rates at, Master Electricians can access a charge-out rate calculator and the yearly Benchmark Survey and Charge-Out Rate report. Both of these tools can help you look at trends in charge-out rates across a variety of electrical sectors.
- Access: Charge-Out Rate Calculator
Job management
Job management software can help not just schedule your work but increase efficiency, and even understand if you work is making money. Programs like Tradify, AroFlo or Simpro can help keep your work on track, communicate with clients and issue invoices, while connecting with popular accounting software including Xero, MYOB and QuickBooks Online. Some systems even allow you to track the costs of materials and labour and accurately forecast if a job will be profitable.
Master Electricians can access exclusive discounts with Tradify.
Trademarking
Your business name and logo are your intellectual property and should be protected. A trademark is a legal protection for your brand and helps customers distinguish your products or services in the market.
Using a name or registering a website domain do not grant you exclusive rights to a name. If you want exclusive rights to your business name, you need a trademark.
MEA has resources that can help your business. Master Electricians have free access to the Charge-Out Rate Calculator, member benefits, as well as the Technical, Safety, and Employer Advice Hotlines. Phone 1300 889 198 today.