Editor's Note: This is the second in a four-part series that focuses on specializing in the trade contracting niche. Part 2 discusses common business challenges faced by trade contractors and how specialist accountants can help their trade contractor clients build better businesses with efficient systems.
Working as an accountant for a trade contracting business can involve more than preparing taxes and financial statements. Accountants who are experts in an industry such as trade services can be, and often are, perceived as valued business consultants.
Specialist accountants understand everything that can have a financial impact on a project or the company. They evaluate and advise on business data, products and services to streamline their clients’ businesses, leading to improved internal procedures, and increased efficiency and profitability.
To stay profitable and grow in today’s competitive business landscape, trade contractors must look at how they can improve:
- Business insights for informed decision-making
- Staff accountability
- The management of materials, labor, on-costs and company overheads
- Workflow organization from job creation and dispatch to invoicing
- Operational costs and admin time
- Invoicing procedures and tools to improve cash flow and profitability
- Communication, transparency and visibility throughout the business
- Managing technicians in the field.
If business owners don't have the right systems in place to help alleviate these issues, they often find themselves working in their business, rather than working on their business as a true business owner should be.
You can help your trade contractor clients make the true transition – from self-employed to business owner – by offering the right solution.
The right systems, products and services
With the right systems and software in place, business operations can become structured and systemized, rather than key information only existing inside the business owner’s head. Then your clients can begin to focus on the big picture and business strategy – working on the business instead of in it – which leads to growth and greater profitability.
If you’re knowledgeable about the industry-specific software available to your trade contracting clients (which integrates with your accounting software), you can recommend those who will be best at helping streamline your clients’ businesses.
Most standard software isn't specific enough to meet the needs of the trade services industry, so you'll need to partner with vendors that address the specific needs of the market. Choose vendors that have programs in place to get you up to speed with the software fast.
Business data and decision making
As an accountant, you help your clients understand their financial data, providing the reports they need to make informed financial decisions.
In the trade contracting niche, you can assist clients with their operational decisions as well. When a trade contractor has systems in place that provide operational reports on inventory, job profitability, and more, you, their trusted advisor, can help them interpret these reports to make informed decisions on the operational aspects of their business.
For example, many contracting businesses don't have visibility of the profit or loss of their business until their accountant provides their P&L financial statement at the end of the year.
Whether quoting large projects or small service jobs, having only this visibility is challenging as there is no connection between direct expenses (labor, material cost) and invoicing. Some jobs could be very profitable, while a single project could run at a significant loss.
A good job management system provides a P&L report to show the profitability of each job. This is one of the most valuable reports a trade contractor can have, as it shows gross and net profit/loss job by job. If you’re able to share and interpret this job-by-job analysis, you can help your clients correct pricing, inefficient labor or material management to increase their profit margins.
The bottom line
The more knowledgeable you are about the specific reporting needs of the trade and service industries, and the products and services available, the better you’re able to service your clients’ individual and business needs.
And the more time and money you can save your client, the more justified and valued your relationship with them will be.
Kim Gill is Director of Marketing for simPRO US, bringing 20 years of experience in marketing and association management to the position. She is responsible for developing U.S. marketing and communication activities in line with corporate strategy, designing and implementing lead generation campaigns, managing and coordinating events, and initiating and maintaining association partnerships at the local, state and national levels.