11 Ways to

Maximise Profits &

Boost Cash Flow

Welcome

Relax

Enjoy – eat, drink, connect,

Be Open – take notes, ask how?

Phones, parking, toilets

Participate – share

Contribute & Win…

Link to slides – slideshare.net/trade insights

Today…

Take home…

1. Tools to significantly increase gross profit &

before tax profit (EBIT)

2. Steps to keep the cash flowing

3. Game Plan to implement these tools

4. Example/case study

Who is PROTRADE United?

We believe in a united effort and collective

knowledge to help you find an even better way

to run your business…

Trade specific solutions in…

• Strategy – income, cash flow, profit, team development

• Accounting – financially well organised, minimise tax,

• Marketing – online & offline

• System Integration – streamline IP into the cloud & protected

Why PROTRADE United?

Ultimately for 3 reasons…

1. To give you the freedom of an unhurried life

2. To raise the standards of trades and related

service businesses around Australia

3. Decrease the anxiety and depression related

deaths amongst trades

Some of our clients…

Some of our clients…

Quick hello…

Breaking the Mould

How to make the transition from being a

‘tradie’ to a

professional of your trade…

Does it get any easier?

Don’t wish it was easier.

Wish you were better.

Jim Rohn…

Your own economy…

Psychology vs. Skills/Ability

Are you prepared to change?

Earning potential with your

hands?

$000’s

Earning potential with your

head?

$000,000’s

Top 7 Key Frustrations for Many Trade Businesses…

1. Working too hard for little/no remuneration2. Working under too much stress/pressure3. Too much time in the business – missing out on family

and lifestyle4. Staff issues5. Inconsistent work/jobs6. Chronic cash flow7. Constantly chasing their tail – no let up!

Over the lifetime of a business…

• Only 39% are profitable• 30% break even• 31% lose money

Challenges…

To think about…

• If you don’t understand your numbers you don’t understand your business.

• Understanding vs. Doing• Mange your money wisely and you will have more

money to manage.• 80/20 – Emotion vs. Mechanics

Income vs. Profit vs. Cash Flow vs. Equity

The Oh C&%# moment!

PROFIT&LOSSSTATEMENT

Income $100,000

Less:

COGS $45,000

GrossProfit $55,000

Less:

Overheads $45,000

Balance $10,000PROFIT

The Oh C&%# moment!

PROFIT&LOSSSTATEMENT CASHFLOWSTATEMENT

Income $100,000 CashReceived $100,000

Less: Less:

COGS $45,000 COGS $45,000

GrossProfit $55,000

Less: Lessotheroutflows:

Overheads $45,000Overheads $45,000

RepayLoan $5,000

BAS(previousquarter) $15,000

Total $65,000

Balance $10,000PROFIT Balance -$10,000CASH

What are the consequences?

• Stress – Loss of Sleep, Relationships

• Reputation/Integrity

• Staff leave

• Credit rating

• Insolvency/Closure

• Bankruptcy

The Steps…1. Understand the causes

2. Evaluate your beliefs

3. Track, Measure, Manage

4. Improve profit per job/per X (Real Income)

5. Minimise overheads

6. Set up your money flow

7. Get money in faster

8. Delay money going out

9. Manage the risks – shortfalls/contracts

10.Get a great team around you

11.Educate yourself continuously

1. Understand the causes?

• Poor Awareness/Money Management

• NO measurement/understanding

• NO cash flow projection

• Unaware of break even

• No cash reserves

• Undisciplined spending/SMTHYE!

1. Understand the causes?

• Declining sales

• Declining profit margins

• Not charging enough

• Too much WIP (Work In Progress)

• Poor efficiencies/inefficient team

• Lack of KPIs

• Poor Productivity/Focus

1. Understand the causes?• Delays in getting money in

• Delayed invoicing

• Poor payment terms

• Bad choice of clients

• Paying suppliers too quickly

• Overheads too high

• Excessive interest

• Poor business model

Example –Pre AwarenessDay 1 - Get the job (no deposit)

Day 7 - Start the job & buy materials (50% Cash, 50% on 7 day account)

Day 11 - Complete the job & pay the team

Day 14 - Pay for materials (50%), Invoice the client – pay on 30 days

Day 44 - Receive payment from client

This equates to possibly 44 days negative cash flow

What is NOT the magic solution?

More income is NOT the magic solution

– sometimes just the same challenges

with more zeros!

What has been valuable?

2. Evaluate your beliefs - (B.S.)

• Value yourself

• Raise your standards/expectations

• Focus

• Philosophy

• Psychology

• Money flow and allocations

3. Track, Measure, Manage

• Scorecard/Dashboard

• Break Even

• Gross Profit, Net Profit

• Income forecast

• Cash flow

• Worst Case Scenario (WCS)

• Software

• Understand the cash cycle in your business

• Review at least monthly

4. Increase Gross Profit (Real Income)

• Know your existing GP – review regularly

• Measure GP per X – job/project, van, employee

• Are you charging enough?

• Increase prices/charge out

• Get more clients/customers

• Increase average job value

• Add MASSIVE value

4. Increase Gross Profit (Real Income)

• Negotiate better rates with suppliers

• Review your pricing strategy/manage your mark-up

• No discounting/compete on price

• Upsell extra services/products

• Negotiate better pricing of materials

• Reduce cost of materials/packaging/freight

Improve efficiencies/productivity• Job Management Software

• Track budget hours to actual – use of time

• Evaluate employment model

• Role of team – Get or Keep

• Reduce overtime

• Reduce faults

• Implement KPI’s

• Offshore non productive tasks

4. Increase Gross Profit (Real

Income)

Select Better Clients/Customers• Sack the slow payers – they are not worth the

headaches

• Check credentials with new clients before accepting

credit terms

• Trade Debt Insurance

4. Increase Gross Profit (Real Income)

• Know your costs to run your business – day/week/month

• Evaluate every salary role , every month

• Review expenses monthly

• Negotiate better rates for power, phone, insurance, etc…

5. Minimise Overheads

6. Managing the flow…

6. Managing the flow…

6. Managing the flow…

Asuggestion…

GrossProfit

PayYourProfits5-10%

GroupTax,Super,GST

Training–You/Team5%

TeamWages–includingyou

EssentialRunningExpensesNon-essentialSuppliers

CashSurplus

7. Get Money in Faster• Firm up payment/trade terms with customer

• Deposit - use mobile payments/EFT

• Progress payments

• Invoice/Payment on completion - Mobile payment/EFT

• Make it easy for clients to pay

• Incentivise to pay early/on time

• Sell off old inventory

• ASK if necessary

Invoicing System

• Job Management Software

• Immediately on job completion – KPI’s

• Follow up – automate, where possible,

• Track slow payers

• Have a debt collector on hand and use them – follow

through with our word

7. Get Money in Faster

Automate…

• Take full advantage of terms – don’t pay too soon

• Negotiate payment terms with suppliers

• Communicate always – if there is going to be a delay

• Review expenses quarterly

Insurance

Electricity/Phone

Salary/HR – Get or Keep

8. Delay Money Going Out

9. Managing Risks

Shortfalls - Not if, when

• Start building cash surplus/cushion asap (PPF)

• Apply for overdraft/credit in advance

• Credit card*

9. Managing Risks

• Have tight contracts

• Understand the Security of Payments Acts

• Trade Credit Insurance

Example –Pre AwarenessDay 1 - Get the job (no deposit)

Day 7 - Start the job & buy materials (50% Cash, 50% on 7 day account)

Day 11 - Complete the job & pay the team

Day 14 - Pay for materials (50%), Invoice the client – pay on 30 days

Day 44 - Receive payment from client

This equates to possibly 44 days negative cash flow

Example –Post AwarenessDay 1 - Get the job and receive 10 % deposit (to secure the job in calendar)

Day 7 - Start the job - Buy materials (50% COD, 50% on 7 day account) request progress payment on materials arriving (part of contract)

Day 11 - Complete the job, Invoice client - (receive payment on completion or 7 days), Pay the team

Day 14 - Pay for balance of materials (50%) – out of client payment

(Day 18) Worst Case - Receive payment from client

This equates to a +ve cash flow or just 7 days negative cash

flow (for only 50%)

• Book keeper

• Accountant

• Lawyer

• Coach

• Mentor

• Peer Group

10. Get a great team around you

• Master numbers and your money

• Note your mistakes

• Study the best

• Invest in the best

11. Never stop learning

What has been valuable?

Pricing

• Brand

• Managing Expectations

• Education

• Mark up vs. Margin

DiscountingCost Of Goods Mark Up Sale Price GP Real' Income

$1,000 100% $2,000 50% $1,000

Discount Amount New priceNew Real Income Extra sales required

5% $100 $1,900 $900 11%

10% $200 $1,800 $800 25%

15% $300 $1,700 $700 43%

20% $400 $1,600 $600 67%

25% $500 $1,500 $500 100%

Price IncreaseCost Of Goods Mark Up Sale Price GP Real' Income

$1,000 100% $2,000 50% $1,000

Increase Amount New priceNew Real Income Extra sales required

5% $100 $2,100 $1,100 -9%

10% $200 $2,200 $1,200 -17%

15% $300 $2,300 $1,300 -23%

20% $400 $2,400 $1,400 -29%

25% $500 $2,500 $1,500 -33%

What ACTION will you take?

It’s interesting you know…

Most of business owners will…

• Hear what we say,

• Understand it intellectually,

• Agree with all the principles,

• Get excited about what’s possible

• KNOW that it is the thing they should

do, yet…

Do nothing!

What gets in the way…

LIFE

!

Which leads to?

Your opportunity to get clear

Complimentary Strategy

Session

• Where you are

• Where you want to be

• The Game Plan to get

your there…

Participant or Spectator…?