Expansion or Contraction- a Trade specific dilemma?

smallfishtony 25 October 2013

Need direction?

There seems to be a trend within some sectors of the business community, and this trend appears to be more prominent with trades based businesses. This trend generally occurs following rapid and successful growth of the business, and can have devastating consequences.

After continuous growth, the owner usually sees the business costs and owners workload increase, tax liabilities increase, and outstanding debts continually growing. Soon after this the business owner generally has an ‘oh no’ moment.

The bank balance or bottom line results may not be accurately reflecting the expectations of the business owner. The successful tradie who was making a great solid income by themselves, now has a number of staff and a fleet of vehicles to manage and finance, and if they follow the unfortunate trend that generally occurs- the owners are making no money from the business. What is happening is they are simply struggling each week to pay an increased payroll, suppliers and managing the increased volume of work and stress associated with it, clearly an un-sustainable model!

The initial plans of ‘taking over the world’ in the chosen field are quickly turned into a crisis management path of ‘should I continue to expand’ or ‘do I contract the size of the business’ for the viability and sustainability of the longer-term survival.

I have worked with many trade based businesses and have seen this too many times and in nearly all cases, the business isn’t ‘broken’, but is does need some fine tuning to be sustainable and viable, as well as rewarding for the owner for their time and money invested.

So what’s missing?

Generally the missing element is some structure, process and discipline around the business. As mentioned earlier, these situations generally get to the critical stage due to organic growth with no process. Some common opportunities include:

    – Adding staff incorrectly (contractors vs. staff guidelines, payments, Superannuation, performance management etc.).

    – No financial controls – no tracking or measuring of profit, cash flow etc., no structure around pricing, cost controls, stock controls, asset control etc.

    – No marketing plan or process – no brand exists, no strategy for online/ offline etc., social media mistakes (the old drunken photo on Facebook that people see).

    – Failing to develop a broad outline of where they want the business to go, and I’m not talking fully-fledged business plans, but at least a basic strategy.

    – Not meeting regulatory obligations or standards, especially in OH&S and workplace safety.

What can be done?

It isn’t too late! Take the time to go back to the business and review where it is at in a financial and structural manner. It’s a bit like building the house, you need to keep track or, and review the plans to ensure the end goal is as it was intended. Business is the same- have the plans and work to them.

If you aren’t able to complete this, or don’t know where to start, this is where you bring in some outside help. You may have a trusted colleague or mentor in the industry who was successful, a good proactive accountant, or you can get a coach or consultant. The key point of difference to successful vs. unsuccessful businesses in all sectors is the ability to seek and use experts outside of your own skillset. There is no shame in it, as all successful CEO’s and companies do so.

Should you decide you have the basic skills but need some refresher, expressions of interest in a 6 week group workshop for ‘Building a better business’ aimed specifically at trade businesses is currently open. This is to simply show an interest and doesn’t lock you into anything, as details will be coming in the near future. To register click here.

For more information on developing a plan for your business, book a free session with tony@tonyozanne.com or visit www.tonyozanne.com

(Image www.freedigitalimages.net ID: 100185424)

What's Your Opinion?

Please login to post your comments, or connect with

CBR Tweets

Sign up to our newsletter


Search across the site