Busy But Broke: Why Your Busiest Jobs Might Be Costing You Money

It is one of the most common things I hear from tradies and service business owners around Moreton Bay: "We have never been busier, so why is there never any money left?"

The phones are ringing, the team is flat out, the calendar is booked three weeks ahead. On paper, things look great. Then you look at the bank account at the end of the month and wonder where it all went.

Here is the uncomfortable truth. Being busy and being profitable are two completely different things. And very often, the jobs keeping you busiest are the ones quietly costing you the most.

The problem is not how much work you do. It is the mix.

Most businesses do a range of different jobs. An electrician might do small service calls, switchboard upgrades, new builds and commercial maintenance. A plumber might do blocked drains, hot water replacements, renovations and strata work. A builder might do small repairs, extensions and full new homes.

Each of those job types has a completely different profit profile. Different labour hours, different materials markup, different travel time, different callback rates, different payment terms. Yet most owners look at their business as one big pot of revenue. If total sales are up, it feels like things are going well.

The trouble is that revenue hides everything. You can grow sales by 20 percent and make less money than last year, simply because the extra work came from your least profitable job types.

How the busy trap happens

It usually creeps in without anyone noticing. A few common patterns I see again and again:

• The easy yes. A builder or property manager sends you steady volume, but at a rate you agreed to years ago. It fills the calendar, so you keep saying yes, even though the margin is thin.

• Underquoting the hard jobs. Complex jobs blow out on hours, but the quote was set like a standard job. The team works harder for less.

• Travel nobody charges for. Small jobs spread across a wide area eat hours in the ute that never make it onto an invoice.

• The callback cost. Certain job types bring more callbacks and warranty visits. Those hours are real costs, but they rarely get traced back to the original job.

• Slow payers. Some clients pay in 7 days, others in 60. Same revenue, very different cash flow.

Put a few of those together and you end up with a business that looks healthy from the outside and feels exhausting from the inside.

Three numbers to check this week

You do not need a complicated system to see what is going on. Start with these three numbers for each of your main job types.

1. Gross margin per job type

Take the revenue for that job type and subtract the direct costs: labour (at your true cost per hour, including super and on-costs), materials and subcontractors. What percentage is left? You will often find a 20 point gap or more between your best and worst job types.

2. Gross profit per labour hour

This is the one most owners have never calculated, and it is the most revealing. Divide the gross profit from a job type by the total hours it took, including travel, quoting and callbacks. Your team's time is your scarcest resource. This number tells you which work actually pays you for that time.

3. Days to get paid

Look at how long each type of client takes to pay. A job with a great margin that takes 60 days to land in the bank can still put you under pressure, especially heading into the Christmas shutdown.

What to do once you can see it

When you lay these numbers side by side, the picture usually becomes very clear, very quickly. From there you have a few levers to pull:

• Reprice the work that does not pay. Some clients will accept a fair increase. Some will not, and that is fine.

• Shift your marketing toward the job types with the highest gross profit per hour, so more of your calendar fills with the right work.

• Fix the quoting on complex jobs so the real hours are built in from the start.

• Charge for travel and minimums on small jobs, or zone them so the team is not criss-crossing the region.

• Tighten payment terms with slow payers, or ask for deposits and progress payments.

None of this means working harder. In most cases it means doing a bit less of the wrong work and more of the right work. I regularly see owners lift profit significantly without adding a single new customer, just by changing the mix.

Busy should mean profitable

If you are working long hours, the team is stretched and the bank balance still is not where it should be, it is worth stopping for an hour to look at your job mix. The answer is usually sitting in your own numbers.

This is a big part of the work I do with business owners across Moreton Bay. Through the Pumicestone Chamber of Commerce, I am currently offering a free 12-month strategic plan to local businesses, which includes looking at exactly where your profit is coming from and where it is leaking.

If you would like to find out more, book a 15-minute call with me here. No pitch, just a straight conversation about your numbers.

Micheal Parker MBA is a Commercial Strategist with Enable Coaching and President of the Pumicestone Chamber of Commerce. He works with tradies and established business owners across Moreton Bay to turn busy businesses into profitable ones.