Tech Talk: How to Plan for Success with Matthew Jones from Cube Performance

Name: Tech Talk: How to Plan for Success with Matthew Jones from Cube Performance
Uploaded: 2022-12-08T02:45:02.000Z
Duration: 2 h 20 min 39 s

Introduction

In this section, the speaker introduces himself and his co-host, talks about being early for the webinar, and mentions the importance of preparation.

Speaker Introduces Himself and Co-Host

The speaker introduces himself and his co-host.

Being Early for the Webinar

The speaker mentions that they are broadcasting a little bit early.

He attributes this to being on there with his co-host.

Importance of Preparation

The speaker talks about how preparation is everything.

He mentions something about "the seven Ps" but doesn't elaborate on it.

Planning for Success

In this section, the speakers discuss planning for success and having a plan.

July Edition of Trading Pad Tech Talk

The speakers welcome everyone to the July edition of their trading pad tech talk.

July as a New Financial Year

One of the speakers talks about how July is exciting because it's pretty much that new financial year last year's done can't do much about last year it's all about now learning from the mistakes and good things.

Having a Plan

One of the speakers emphasizes having a plan to start with because things change.

They mention that just having a plan whether it's good or bad doesn't matter but just get a plan and apply it then start monitoring it.

Housekeeping

In this section, the speaker talks about housekeeping for Zoom webinars.

Interactive Webinar

The speaker mentions that this is an interactive webinar.

He encourages participants to ask as many questions as possible.

Raise Your Hand Tool

The speaker explains how to use the raise your hand tool.

Q&A Tool

The speaker explains how to use the Q&A tool and mentions that he will be monitoring it throughout the webinar.

Introduction and Overview

In this section, the speaker introduces the topic of the discussion and encourages audience participation. He also provides an overview of Trading Pad, a technology training organization.

The speaker invites questions from the audience and emphasizes the importance of interaction.

Audience members can post questions on Facebook or email them to the organization.

The speaker briefly explains Trading Pad's mission to transform traditional paper-based processes using technology.

Introduction to Trading Pad

In this section, the speaker provides more information about Trading Pad and his background in plumbing.

The speaker founded Trading Pad as a way to use technology to make life easier for businesses.

He has experience in plumbing and used that knowledge to incorporate technology into his business practices.

Trading Pad helps businesses with job management systems, project management systems, and other technological solutions.

The speaker is joined by Matthew Jones, who has experience as a plumber, business coach, software developer, consultant, football team coach, elite athlete, author, podcaster, and Olympic commentator.

Matt's Experience Commentating at Rio 2016

In this section, Matt discusses his experience commentating at Rio 2016 as an Olympic commentator for kayaking events.

Matt was fortunate enough to be offered a spot as a commentator for kayaking events at Rio 2016 due to his background as a kayak paddler representing Australia.

He was coaching athletes who had been at previous Olympics before being offered the opportunity to commentate himself.

Matt describes it as a really cool experience and shares that he was able to commentate on one of his own athletes winning a bronze medal.

He also shares that he enjoyed some downtime with his family while in South America.

Importance of Coaching and Education

In this section, Matt discusses the importance of coaching and education in his own life and in business.

Matt emphasizes the importance of having a coach or someone guiding you to fast track your progress, similar to how athletes have coaches.

He compares his experience as a plumber in the 1990s to his current role as a business coach, noting that he had no assistance or information back then.

Matt knew he needed assistance and education when transitioning out of running his plumbing business.

The speaker notes that understanding technology is key to success in today's world.

The Importance of Mindset in Business

In this section, the speaker emphasizes the importance of having the right mindset when it comes to running a business. He shares his personal experience of struggling with a "trading mindset" and realizing that he needed to shift to a "business performance mindset" in order to succeed financially.

Trading Mindset vs. Business Performance Mindset

Tradies often become business owners because they are good at their trade, but they may not have the right mindset for running a successful business.

A trading mindset is focused on working hard and doing more work to get ahead financially, without paying attention to planning or financial management.

A business performance mindset recognizes that being a business owner requires a different set of skills and priorities than being a tradesperson. Profit is the key metric for success, rather than turnover or hours worked.

Planning for Profit in Your Business

In this section, the speaker discusses the importance of having a 12-month plan for your business and setting goals for profitability. He compares running a business to running a sports team, where you need clear goals and regular reviews in order to improve.

Setting Goals for Profitability

Having a 12-month plan is essential for operating with a "business performance mindset." This plan should include specific goals for profitability.

Thinking about your business like a sports team can help you set clear goals and track progress over time.

Regular reviews are important for identifying what's working well and what needs improvement. Just like after every game, you should review your performance as a team (or as an individual).

There were no significant breaks in the transcript that would warrant additional sections.

Importance of Measuring Business Performance

In this section, the speaker emphasizes the importance of measuring business performance and making educated decisions based on data rather than relying on gut feelings.

Gut Feelings are Not Enough

Most people rely on gut feelings to determine if they are making money across the board.

Relying solely on gut feelings is not enough and is equivalent to gambling with one's business, potential, family lifestyle, and sacrifices.

Business performance should be about planning and making educated decisions.

High Failure Rate of Businesses

Many businesses fail within five years due to lack of planning and tracking their financial performance.

Out of 100 tradies who start a business, only 20 survive after five years. Out of those 20, only two thrive beyond ten years.

Importance of Tracking Business Performance

Many business owners do not know their gross profit, percentage, operating profit or average hourly rates. This lack of knowledge is unacceptable in today's world where tools are available to track these metrics.

It is crucial for businesses to extract data from their accounting system or job management system and measure it against a plan.

Conclusion

The speaker stresses that measuring business performance is essential for success. Relying solely on gut feelings can lead to failure. Businesses need to track their financial metrics using available tools and make educated decisions based on data.

Planning and Accountability

In this section, the speaker talks about the importance of planning and accountability in business. He shares his experience of spending two and a half months putting budgets together for 100 million dollar business units during his corporate career.

Importance of Pivot and Plan

The speaker emphasizes the need to pivot when necessary while still having guard rails in place.

Having a plan is crucial for accountability and making good decisions.

Some people struggle with knowing where to start when creating a plan.

Starting Point for Planning

The speaker suggests starting with breaking down key types of work that will be planned to build and grow in the next 12 months.

Actual data from the last 12 months can be extracted automatically using software analysis tools like Xero.

For those without automation tools, a simple spreadsheet can be used as a starting point.

Tracking Income

It's important to break down income into specific categories such as construction or maintenance rather than just having one general category.

Taking time out to reflect on how many monthly invoices or jobs are done on average is crucial.

Knowing the average monthly turnover for each type of work is also important.

Challenges Faced

Those who only have one account code for all different types of work may find it challenging to determine their average monthly turnover.

Separating Costs for Better Metrics

In this section, the speaker discusses the importance of separating costs to understand gross profit per work type and put metrics and KPIs per work type.

Separating Material Costs

Many businesses have only one material account, which makes it difficult to understand gross profit per work type.

It is important to separate construction materials from maintenance materials to get a better understanding of gross profit per work type.

When looking at financials, never include GST in income or expenses.

Understanding Margins

The speaker asks about the material margin being used (not markup).

A 20% margin is close to a 30% markup.

Applying the Business Model

The speaker asks how many jobs are done per month and what the average turnover is for those jobs.

Hourly rates are discussed, with maintenance rates being higher than construction rates.

The use of subbies (subcontractors) is discussed, with some businesses not needing them at all.

Breaking out costs in accounting packages or job management systems may require additional work but is critical for putting together accurate plans.

Defining Work Types

Defining different types of work helps define customers and go-to-market strategies.

Different types of customers require different approaches, such as relationship building for business-to-business customers and SEO and a good website for residential maintenance customers.

Importance of Segmenting Your Business

In this section, the speaker emphasizes the importance of segmenting your business to increase efficiency and profitability.

Segmentation by Work Type

Segmenting your business by work type helps you position yourself better and attract more customers.

Splitting maintenance work into residential and commercial segments can help you identify clear differentiators in your business.

You can further segment your business based on specific customer needs, such as emergency maintenance or service work.

Segmentation by Revenue Codes

Breaking down construction work into residential and commercial segments can help you identify which type of customer adds more value to your organization.

Identifying revenue codes is easy, but it's important to factor in capacity and hourly rates when investing in delivering that work.

Pay Yourself First

Many business owners fail to pay themselves first, which leads to cash flow problems.

If you can't pull a wage out of your business from the get-go, then you shouldn't be in business.

Business owners should draw profitability from their businesses rather than just a wage.

Gross Pay for Employees

In this section, the speaker discusses gross pay for employees and how it affects a company's finances.

Gross Pay Calculation

Gross pay includes taxes paid by the company on behalf of its employees.

It's important to calculate gross pay accurately to avoid financial discrepancies.

Example Calculation

The speaker provides an example calculation for gross pay, using the fictional employees Malcolm, Bob Jones, and Billy Blogs.

Importance of Accurate Financial Planning

In this section, the speaker emphasizes the importance of accurate financial planning to ensure business success.

Benefits of Financial Planning

Accurate financial planning helps business owners identify whether their businesses are worth running.

It also helps them make informed decisions about investments and expenses.

Common Mistakes in Financial Planning

Many business owners fail to plan for direct costs that correlate with revenue codes.

They also fail to factor in indirect costs such as rent and utilities when calculating profitability.

Conclusion

Accurate financial planning is crucial for any business owner who wants to succeed in their industry.

Understanding Business Costs

In this section, the speaker discusses the importance of understanding business costs and creating a plan to make oneself redundant.

Importance of Knowing Your Business Costs

It is important to factor in all additional costs such as annual leave loading, superannuation, long service leave, and workers' compensation.

Overhead costs are necessary to run a business. It is crucial to know line by line what it's costing you to run your business.

Many business owners fail to have enough clarity and breakdown of their expenses. They often lump everything together into general accounts or miscellaneous accounts.

Making Yourself Redundant

The ultimate goal for any business owner should be to make themselves redundant over time.

However, in the beginning stages of a business, it may be necessary for the owner to still be on the tools and delivering work while putting systems in place and training employees.

Having a clear plan in place can help make yourself redundant over time.

Key Takeaways

Understand all additional costs associated with running your business.

Know your overhead costs line by line.

Create a clear plan for making yourself redundant over time.

Business Budgeting

In this section, the speaker emphasizes the importance of business owners knowing their numbers and working with their bookkeepers and accountants. He also stresses the need for having a clear plan and budget in place to articulate what is needed.

Importance of Having a Plan

Business owners often lack a plan, making it difficult to articulate what they want.

Creating a clear budget helps structure office costs, including rent, phones, advertising, and professional services.

It's important to factor in operating costs such as fuel and maintenance for vehicles.

Digital investments should be considered as an investment rather than an expense.

Understanding Business Costs

Business owners often underestimate how much it actually costs them to run their business.

Going through expenses line by line can help identify areas where money is being spent unnecessarily.

Working with Professionals

Professional services such as accounting, legal advice, bookkeeping, coaching, technology implementation should be factored into the budget.

Investing in digital tools such as trading pads should be seen as an investment rather than an expense.

Overall, this section emphasizes the importance of having a clear plan and budget in place to understand business costs. It also highlights the need for working with professionals and investing in digital tools.

The Importance of Having the Right Tools

In this section, James emphasizes the importance of having the right tools and structuring them correctly to collect data in a way that makes it easy to monitor.

Structuring Tools Correctly

It's important to have the right tools structured correctly to collect data in a way that makes it easy to monitor.

Grouping transactions together and making it easy to monitor is key.

It's pointless having nice shiny tools if you don't set them up correctly.

Investing in Assistance

People often don't want to invest in assistance to get set up right, but this can lead to frustration and wasted money.

Getting Excited About Achieving Goals

In this section, James gets excited about achieving goals and emphasizes the importance of having clear goals for the next 12 months.

Setting Clear Goals

Setting clear goals for the next 12 months is important for ensuring decisions are not made off-the-cuff.

Having a clear line of sight helps ensure decisions are not made off-the-cuff.

Turning Over Income

The plan is to turn over $621,000 with $222k coming from construction and nearly $400k from maintenance.

64% of income will come through maintenance.

Understanding Cost of Sale

Understanding cost of sale is important when budgeting for delivering work.

Power percentages are important to understand.

Cost Breakdown

The cost breakdown for delivering $222k in construction is $77k in materials and subbies, and $106k for labor.

For every $100 spent on construction, it costs $5.35.

Labor and Overheads

In this section, the speaker discusses labor and overhead costs in construction and maintenance businesses.

Chart of Accounts

A dedicated maintenance category should be added to the chart of accounts for payroll purposes.

Materials, federal subcontractors, equipment hire fees, etc., should be categorized as overheads.

Gross Profit

The cost of sale plus gross profit will always equal 100%.

For every $100 earned in construction, $65 is kept as gross profit. For every $100 earned in maintenance, $73 is kept as gross profit.

The overall gross profit margin for a business is calculated by dividing the total gross profit by the total revenue.

For every $100 earned collectively, $70 is kept as gross profit.

Understanding Gross Profit

In this section, the speaker explains how to calculate gross profit correctly.

Common Mistakes

Direct costs are often mistakenly categorized as overhead expenses. This leads to incorrect calculations of gross profits.

It's important to set up expense codes correctly so that direct costs are not mistaken for overhead expenses or vice versa.

Line-by-Line Analysis

Direct labor costs amount to $202k or 32% of overall turnover in construction businesses.

Management labor costs amount to $13 per every hundred dollars earned in revenue for office administration purposes.

Understanding the Importance of Tackles and Missed Tackles

In this section, the speaker discusses the importance of tracking tackles and missed tackles in relation to turnover. They explain that it is crucial to maintain a certain percentage of income relative to expenses, even if the income target is not met.

Key Points:

It's important to track tackles and missed tackles relative to turnover.

If income targets are not met, it's still necessary to maintain a certain percentage of income relative to expenses.

Failure to track sales performance can lead to complacency and poor business decisions.

The minimum operating profit before tax target should be 15% for all clients.

Using Numbers to Increase Profit

In this section, the speaker explains how businesses can use numbers and key performance indicators (KPIs) to increase profits. They emphasize the importance of monitoring KPIs every month and maintaining gross profit margins.

Key Points:

Businesses should monitor KPIs every month in order to increase profits.

Maintaining gross profit margins is crucial for increasing profits.

Increasing turnover while maintaining gross profit margins can lead to increased profits.

Failure to monitor KPIs can result in decreased efficiency, poor pricing strategies, and decreased gross profit margins.

Understanding Business Efficiency

In this section, the speaker emphasizes the importance of knowing percentages and efficiency in business. He explains that monitoring numbers on a monthly basis can help identify trends and make necessary adjustments to improve efficiency.

Knowing Percentages is Key

Operating profit number is relative to capacity turnover and efficiency.

Measuring percentages is crucial for understanding business efficiency.

Increasing turnover without changing expenses can have a direct impact on the bottom line.

Monitoring Efficiency

When direct labor goes up, it's important to monitor jobs and talk to the team to identify inefficiencies.

Processed efficiency can be affected by ordering, scheduling, managing purchase orders, inventory, and team management.

Monitoring percentages on a monthly basis helps identify trends in business efficiency.

The Impact of Margins

Dropping margins from 70% to 60% increases break-even point and requires more work just to break even.

It's important to understand the impact of margins on business profitability.

Conclusion

In this final section, the speaker wraps up his discussion on business efficiency and encourages listeners to take responsibility for understanding their numbers.

Taking Responsibility for Business Efficiency

Understanding business numbers is everyone's responsibility as a business owner.

The ability to put numbers together is key in improving business efficiency.

Budgeting and Forecasting

In this section, the speaker discusses the importance of budgeting and forecasting for businesses. He explains how to create a budget by looking at annual numbers and dividing them into monthly figures. The speaker also emphasizes the need to plan for seasonal changes in business activity.

Creating a Budget

To create a budget, divide annual numbers into monthly figures.

Plan for seasonal changes in business activity when creating a budget.

Use forecasting to plan capacity and spending based on expected profits.

Tracking Expenses

Track expenses by looking at potential months of high spending, such as when building a website or paying for maintenance work.

Use experience and advice from trusted advisors to predict slow periods in business activity.

Working with Advisors

Ask the right questions when meeting with advisors to get the best advice.

Discuss plans for achieving operating profit and minimizing tax liability with advisors.

Put structures in place to protect personal assets as your business grows.

Importance of Asking Great Questions

In this section, the speaker emphasizes the importance of asking great questions to get great answers. He also talks about how having numbers can help in asking better questions.

Asking Great Questions

To get great answers, one needs to ask great questions.

Having numbers can help in asking better questions.

The speaker offers a strategy session for businesses that are turning over around 300K and have been operating for several years.

The strategy session is designed to give Top Line sales and marketing strategies and assist businesses in setting up their planning and all their numbers.

Conclusion

In this section, the speakers conclude the discussion by thanking everyone for attending and emphasizing the importance of increasing professionalism in the construction industry.

Final Thoughts

The speakers thank everyone for attending and encourage them to keep doing a good job.

They emphasize that increasing professionalism is important in the construction industry.

"A rising tide raises all boats."