A conceptual problem solving design. Ability to solve problem. A big yellow lightbulb indicates an idea to solve problems.

As a business coach working exclusively with trades, here are the 10 biggest mistakes I find tradies are making (not necessarily in this order).

If you feel you’re not getting ahead, and your hard work isn’t being reflected in the bank account, chances are you’re making one or more of these common mistakes.


 #1 – Being unaware of margins and losing money on too many jobs
Often I see tradies working really hard, but they’re just not as profitable as they should be. It’s frustrating because they are missing out on the real money. The problem is they just aren’t getting the margins right consistently on every job. This is even more of an issue when the business is growing – you can end up doing more jobs for less money.

 Solution:  Always price based on margin. Then keep track of costs and hours during the job or at least backcost to check what margin you made. This will help when pricing future jobs and show you how to be more efficient.


 #2 – Working too many hours at the expense of health and family
Business is a marathon, not a sprint. When business owners are working 50+ hours per week, they start making mistakes. They are reacting, instead of controlling their business. If this continues long term, they spend most of their time putting out fires, or even worse, their health or family falls apart.

 Solution:  Look at what you’re doing in your week. Then decide what is important. Make your family and your health a priority. Choose what work can be delegated or cancelled. Set some rules for yourself on what you will say “no” to.


 #3 – Not knowing the numbers

Many tradies don’t know their numbers. They are busy, but are they making profits every single month? They just don’t know. This is dangerous. If things go wrong, it’s often too late to correct.

 Solution:  Have good accounting software you use to record monthly Profit & Loss figures. Then measure everything important to you, including sales, gross margins, earnings per worker. Checking on these numbers regularly gives you early warning signs and you will have time to adjust and get back on track.


 #4 – No structure or direction in the business

Lack of planning and systems is a huge problem and can happen in any size business, but especially if a business grows quickly. Important information including customers, jobs, and work standards are all in the owner’s head. This becomes frustrating for everyone; standards start to slip; jobs become slower and inefficient, and the owner works longer and longer hours just to keep things moving.

 Solution:  Put into place good planning, procedures, checklists, and reports in all key areas, from the jobs themselves to work schedules to office systems. If this is done right, it will save everyone a whole lot of time and frustration, and the business can still operate without the owner for significant amounts of time.
 #5 – Relying on a small number of large customers

For some, the easy option is to rely on one or a few large customers for work. This is dangerous because before long they will start calling the shots – when you work, how much you make, etc. Also, if they have less work for you, or go broke, it will have a major impact on your business, sometimes irreparably. If your biggest client went broke (or stopped giving you work), would you survive?

 Solution:  Don’t put all your eggs in one basket. Make sure you have a good spread of customers in different sectors.  Make this a priority. If you want to have a long-term profitable business, this is essential.


 #6 – Giving too much credit for too long

Credit can be dangerous and is one of the biggest downfalls for trades. Many have gone broke because their biggest clients didn’t pay them. Or at the very least have been stressed out with strangled cashflow at the end of the month looking for enough to pay staff, suppliers and the bank while waiting for overdue accounts to come in. How much have you lost in money and time through late payers and bad debts?

 Solution:  Have strict credit terms, take deposits at the beginning of jobs, progress payments, and be prepared to stop work if the account is not paid on time. Only when you are paid can you say the money is yours.


 #7 – Not billing everything out on time or at all

Often, especially on complex jobs, bills are sent out weeks or months later. Some details are forgotten, so not everything is billed, or worse the job is not billed out at all.

 Solution:  Get your team to record all details of jobs including extras (materials and labour) on the job. Then make sure you invoice promptly on completion.


  #8 – Not dealing with leads and quotes effectively

A number of tradies get plenty of good leads but don’t follow them up early enough before they go cold. Or because they don’t qualify their enquiry by asking good questions, they waste a lot of time quoting jobs they were never going to get.

 Solution:  Firstly, make sure you have time available every week in your calendar to follow up leads and quotes. You have spent money and effort getting them; don’t blow it because of lack of time. Ask the right questions before quoting which frees up time by identifying the best jobs which are worth pursuing and by weeding out the tyre kickers. Always go through the quote with the customer – it will instantly increase your conversion rate.


 #9 – Spending too much time on the tools instead of growing the business

Too much time on the tools leaves no time to find more work or make the team more efficient. It is important to schedule time each week for marketing/selling and putting systems in place. Otherwise, you will restrict growth and profits.

 Solution:  Spend at least one day per week on marketing and sales activities. Plan each day in advance.


 #10 – Relying on a small number of lead sources

A deceptive but deadly mistake. You might have plenty of work in the short term, but if you rely on one source e.g. word of mouth, you’ll be stuck in a feast or famine work cycle. It’s hard to get ahead, because what is made during the good times is then lost again when it gets quiet.

 Solution:  Have a good marketing plan and promote your business consistently using a number of strategies both online and offline.

If you see yourself making some of these mistakes, the good news is it’s easy to fix, if you put the right strategies in place. Many tradies I have worked with have been able to turn their businesses around by focusing on these solutions.


So start now by working on the one mistake causing you the biggest headache, then the next and the next. It won’t be long before you start getting the business you want.


Want more insights? Get my free guide “Next Level Your Profit”.
Go to: nextleveltradie.co.nz/guide

Daniel Fitzpatrick

Business  Coach