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    • sammyt

      Business Owner

      @sammyt

      Approach & Growth

      Question submitted 15/07/21 @ 03:43pm

      Hi Experts. We are a small plumbing/drainage/gas business struggling in the world of over working with little return. We are not sure what we are doing wrong - maybe pricing structure, what market to approach, what clients are the most profitable to the least profitable and how to hire staff with little to no capital behind us. We have the work there and are constantly busy. We turn away work because we simply dont the have the time to do it, we are too scared to take on staff as we dont have the equipment to set them up with, the finances to secure a weekly wage or the trust that comes with good workmanship. We are are only a newly established company and can see us setting up for failure. Any advise, would be great. Thanks.

      Category: Business Growth
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      • Nick Rowland

        Industry Expert

        @nick-rowland

        Reply submitted 15/07/21 @ 03:43pm

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        Hi SammyT,

        Interesting (and really good) problem to have here. I know a lot of construction companies are in this position – certainly a lot of business out there. Its the age old question of supply v demand and its never an easy thing to navigate from a resource perspective. Is there a way you can take on the work and then contract others for the completion of it rather then taking on a weekly wage? You could have a pool of individual contractors who you bring in as required – I’m sure there are heaps out there that could look at that? The other option would be to take the risk of bringing in say a full time contractor over 3 months and take a smaller risk? There are plenty of ways to cut it and don’t be afraid of expansion – if the business is there you need to take on as much as possible and then work frantically to fulfil the obligations in some way – but it is a hard thing to balance!

        You could always charge more as well – if there is enough demand you will get the clients – need to find your pricing sweet spot.

        Cheers,
        Nick

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      • Julian So

        Industry Expert

        @julian-so

        Reply submitted 15/07/21 @ 03:43pm

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        It is a great problem to have when you turn away work.

        I suggest before you look at expanding, you find out what your sweet spot is, i.e. the type of customers or market segment whereby you can differentiate and charge more, and you can make a decent return.

        It is very common for first time business owner to underestimate the value they provide to the customer and discount their price too much.

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      • Sonya Crosby

        Industry Expert

        @sonya-crosby

        Reply submitted 15/07/21 @ 03:43pm

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        Hi and congrats on having built demand so quickly in a new business! If you are struggling then I suggest you take a look at the customers you have done business with and look at which ones are ‘good customers’ for you (lower cost to serve, type of service that best fits your skills and feasibility etc). Once you’ve done this then actively look for more of the same. Not every customer is good for your business!

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      • JTyson

        Industry Expert

        @jtyson

        Reply submitted 15/07/21 @ 03:43pm

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        Kia ora Sammy

        1. Look at what your more profitable work is, I would suggest in plumbing it is higher end residential, commercial can provide good contractuaral cash flow work but not high profit margin usually
        2. I agree with Nick about using contractors or labor hire for overflow work, then you don’t have to have employees and the stress of paying wages every week you only use them when the work is there
        3. Growth phase where you are at is the same for most businesses its called a tipping point, and often a chicken and egg situation, as in tricky to balance demand with resource.
        4. It may be good to look at your pricing, if you know a company in your industry that is doing well, ask to go for a coffee or have a phone chat to find out what they do, maybe outside your region as it can be competitive.

        My experience in the construction industry is it down to efficiency, pricing, the type of work you do.

        There is a great book out there written by a ex business owners and mayor of Wellington called ‘Slippers’ by Mark Blumsky if you are into those type of books, ideas around how to stand out and provide that point of difference

        Go well

        Jen

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