Self employed and finding my groove?

[Knappers]

I've been at this for a while now and am not finding myself to be as settled as I think I should.

When I first took the leap into 'selfemploydom' I thought I was going to TAKE OVER THE WORLD (as many probably do).
But 6 years on and I find myself like a Swan floating about while frantically thrashing around under the surface.

My other half recently expressed an interest in coming on-board, to do all the things I want to and don't have time for, but after several months I'm still trying to understand what she's doing other than taking early (semi) retirement

I'm doing gas, heating and plumbing work, no bathrooms, mostly maintenance, boiler swaps, servicing etc.

My issue at the moment is with the boiler replacements as I've been doing one every week and I'm really not enjoying myself (poor me).
I tend to get most jobs I quote and worry that I'm pricing too keenly although small increases tend to swing things hugely the other way. I'm having to compromise on workmanship and it's always a rush to get finished.
Anyone got any advice on trying to sell a quality job to 'loyal' customers who seem happy to 'cheat' with some random nobody just to save £100-£200?

Maybe I just need to do more quotes and play more of a numbers game, so that not only are the customers happy but I am too?

 

[oz-plumber]

The only thing you can do if you're getting the work and not making any money is to jack your prices up.
Otherwise you will continue to flounder where you are at the moment.

Put you prices up slowly and work to a point where you are happy.

Don't try and be the cheapest price possible on all occasions.
Learn to say 'no' to jobs that you are not going to make any money on or make less money on than you would on wages.

 

[Scott_D]

I have been thinking of putting all the extra bits down that you would do as standard, separately on a quote to get the price down but show what you are doing extra to other quotes.

Compliance pack:
Limescale fighter
Shock arrestor
Magnetic system filter
£250

 

[PETE 123]

Charge more do less balance out.

 

[Knappers]

Thanks for the responses, it's not that I'm not making money although I do think I'm giving too much away to keep people happy (little amendments at no cost etc) like today I'm popping back to a boiler I fitted 3 weeks ago to cap off gas for their kitchen fitter FOC.
The odd bit is ok as I see them like loss-leaders and I liked that customer (also he works at hire shop).
I definitely would like to charge a bit more but want the admin to support the increase, like introducing maintenance contracts, streemlining quotes and invoicing, cross selling other services, automated reminders, help articles on website etc.
Currently charge £60 first hour, £40 ph after that, £300 day rate (no vat) which is about right in my area but £70, £50, £350 would help with moving things forward a bit.

Think I'm just feeling a bit delicate after being under the hammer for so long.
Time to suck it up - I've got work to do!

 

[oz-plumber]

Popping back FOC for a kitchen fitter to suit a customer.
If the kitchen fitter had to employ a plumber to cap off the gas, the plumber would expect to be paid.

Did the home owner say to the kitchen fitter, " Don't allow for the Plumber to cap off the gas, my plumber will do it for free"

And are you expected to reconnect the gas for 'Free' also

There's 2 to 3 hours of your time gone doing something for nothing when you could be making money elsewhere.

At the end of the day, that could be 10% of your weeks work you've done for no financial gain.

Do that twice a week, your losing a day of income, because you want to be a good guy.

Send the customer a bill for what you've done. They would have to pay someone to do the works.

You wonder why you are in this predicament!!!!

 

[Knappers]

Was 15 min but your right, I'm definitely a busy fool.
In this instance I'm happy, they asked during boiler install but I offered to return later, they kept me full of tea and paid immediately.

I need to be more savy on others tho, I spent a couple of hours on yesterday's install getting pipe tucked in like the customer wanted but was clearly stated on quote that pipes would run on surface between boiler and worktop, not bent several times and tucked close to boiler before down neatly in corner. I liked how it looked but would rather have had dinner with the kids!

 

[IND_Nick]

It is a very difficult balance being a good quality tradesmen/person, and a savvy business owner. As rightly said above you need to make sure all your working time is paid for or accounted for. There is some logic in doing the odd quick job for a good customer if you believe more work will come from it, or a nice referral. It can often be the best form of advertising by having a good word of mouth referral business in the local area.
Definitely look at your pricing, my business went VAT registered about 5 years ago and I have never been busier, my main regret is I could of been charging that 20% years before with no problems. If people don't want to pay for your services then fine, you will have time for others who will.
Make sure you communicate with customers, especially in writing for big jobs, on what they are being quoted for and extras are exactly that, 'extra'!
And lastly I book out at least one Friday each month for a long weekend. If your head is in a mess your work and home life will suffer.

 

[Donkey Table]

It is a very difficult balance being a good quality tradesmen/person, and a savvy business owner. As rightly said above you need to make sure all your working time is paid for or accounted for. There is some logic in doing the odd quick job for a good customer if you believe more work will come from it, or a nice referral. It can often be the best form of advertising by having a good word of mouth referral business in the local area.
Definitely look at your pricing, my business went VAT registered about 5 years ago and I have never been busier, my main regret is I could of been charging that 20% years before with no problems. If people don't want to pay for your services then fine, you will have time for others who will.
Make sure you communicate with customers, especially in writing for big jobs, on what they are being quoted for and extras are exactly that, 'extra'!
And lastly I book out at least one Friday each month for a long weekend. If your head is in a mess your work and home life will suffer.

Do you have liability insurance? Off beam but if your a sole trader you could loose your shirt.

 

[IND_Nick]

You've lost me, what does having liability insurance have to do with a work life balance and passing on a few bits of advice from my own experiences?

 

[Gasmk1]

I was charging 60 first hour and 30 for next and 400 day rate 5 years ago.

 

[Donkey Table]

You've lost me, what does having liability insurance have to do with a work life balance and passing on a few bits of advice from my own experiences?

You fit a pattern Ive seen often. Your doing a good job, word gets about, your reasonably priced, your too busy, the hours are long, you do fiddly jobs too. One of the things that goes first is your admin. That includes public liability as it eats into your income. Then you get some git who pops one of the joints you do in a job and it floods the downstairs, bingo it claim time, and the public liability isnt there to cover it.

Part of my job is writing software, you get paid much more if your good at spotting patterns, especially outliers.

 

[IND_Nick]

Fair point, although not applicable for me. I was lucky that when I did my apprenticeship years ago the guy I work with stressed the importance of keeping on top of paperwork, income and profit. I have a book keeper who reconciles everything each month so I know exactly what's been made/spent and still outstanding.
I have a few lads who subcontractor to me a few days each week and they definitely fall into the category you mentioned, they are always rushed off their feet and never seem to have much to show for it.
I pick and choose my work very carefully, I also have some properties that I renovate so never have any issues with filling the diary or regrets if I don't get a quote.
I also would mention that, as I'm sure you'll agree, using the right software packages can make life considerably easier. I run Gas Engineers Software for everything and it link to the accounts package my book keeper uses. It is really easy to track everything, chase anything and keeps everything in one place.

 

[Scott_D]

I would drop the freebies. You haven’t done it for free you have cost yourself time and money.

 

[Murdoch]

What I did was to concentrate on a smaller radius from my home and that paid off well so less travelling between jobs too - that said there are parts of my patch where I won’t work!

 

[Ric2013]

What I've noticed is that often it's the least needy people who aren't afraid to ask for freebies, or just try to get them by not discussing money. I have never had a new kitchen, nor have either of my parents, but I have never seen my mother try to get work done for free (except from BT, but then that's a big corporation). Do I really want to do favours for people who have more wealth than they need, or would I rather charge them and give the money to the local food bank if I feel I'm raking it in too fast?

Feeling sorry for people aside, it is very difficult to know whether freebies really get you extra work or not. I do have a customer (a very nice retired lady) who once said as I was mumbling about prices as I was writing the invoice (I was literally 5 minutes over an hour and decided to round it down) that I should make sure I was charging enough and should round up if I needed to. I said not to worry, that it was enough. She gave me some soup to take home and helped me load my van. To be fair, she is very frugal (she is a Quaker, after all) and all the work I've done for her has been maintenance work, but she appears to be frugal at her own expence, and not at the expence of others, for which she has my respect - but she doesn't ask for freebies.

You may find (and this is someone else's idea, so I can't claim credit) that you are getting referrals from customers who expect freebies and a certain price range, which may explain why you lose work if you up your prices. Possibly, though, if you do good work at a higher price (even if you still throw in freebies, they would be on top of a higher basic wage), you'll be referred to people as expensive but good - which may suit you better?

 

[Ric2013]

What I did was to concentrate on a smaller radius from my home and that paid off well so less travelling between jobs too - that said there are parts of my patch where I won’t work!

That was my plan - before life got in the way and I had to go abroad: advertise hard in my local area and reduce my callout in that area to reflect the reduced travel. An element of of greenwash(*) and it fits it with my environmental beliefs (and strong dislike of traffic jams). Town traffic in Colchester has got to the point that parking the van at home and making use of cycle routes to get to the merchant saves a lot of time.

*The reason I say there is some greenwash is that the main environmental impact of plumbing is probably in the manufacture of goods or the use of the goods once installed and it is generally the customer who chooses what they want fitted and how they use it.

 

[PETE 123]

Instead of doing work free say to custard as your a good customer i will come round asap and only charge you min charge.

 

[WC1]

My prices used to be cheaper, I found I often got cheap customers who didnt really want to pay for anything and were more likely to try it on.
Imo spend more on generating enquiries and you'll have a better selection of customers to choose from.

 

[Knappers]

Some good advice here thanks.
I will keep doing little free/cheap bits occasionally, I don't respond favourably to customers asking for freebies but I think offering to do a 15min favour after taking £600 on a new boiler is good for buisness in the longrun (and it makes me feel good!). I'm not going to avoid customers expecting a bit extra sometimes but will look at increasing my rates, maybe £70/£50/£350 (77/55/385 if I tip into VAT reg).
And stop reducing quotes when jobs goes well (another problem I have)
After years running around the country I over compensated when I went self employed and now rarely travel more than 5 miles between jobs.

I have liability and indemnity insurance.

Hopefully my other half will eventually get up to speed and can do the extra admin stuff, I've got a few great ideas on how to improve my customers experience and would be nice to see some of them implemented.

Anyway, I've got the weekend off for a change, need to sort the van out so I can fit the KTM in for an enduro day at Houghton Conquest on Sunday
(Expecting a very tired and grumpy Monday morning!)

 

[Gasmk1]

To save going into vat make your other half self employed and let her bill for the small jobs,

 

[Murdoch]

To save going into vat make your other half self employed and let her bill for the small jobs,

Isn't that fraud?

 

[Gasmk1]

Why it becomes two companies one for larger jobs one for smaller

 

[Knappers]

It's a bit iffy.
Want to look into supplying parts for larger jobs as an agent, basically customer buying parts but I pass cost through buisness and include on invoice without including in turnover.

 

[Ric2013]

Why it becomes two companies one for larger jobs one for smaller

I see your point. And there may be a way of splitting the liability, quite legally. May be worth discussing with an accountant. I'm not normally a fan of this sort of thing, but we all know VAT is a regressive tax.

But if he's doing the work and she invoices the customer is he A her employee, B subcontracting to her, or C working cash in hand? So it could probably be seen as an attempt to avoid paying income tax and VAT that are legally due.

 

[Knappers]

Linked businesses between partners definitely won't hold up in court and would be found to be tax evasion.

 

[Murdoch]

It's a bit iffy.
Want to look into supplying parts for larger jobs as an agent, basically customer buying parts but I pass cost through business and include on invoice without including in turnover.

that sounds dodgy too!

 

[Chuck]

Isn't that fraud?

A relatively recent regulation called 'IR35' has pretty much killed off such schemes for income tax and national insurance avoidance:

Important facts for contractors - off-payroll working rules (IR35)

www.gov.uk

Not sure about whether splitting into two companies in order to stay below the VAT threshold works but I think it's unlikely.

 

[EvilDrPorkChop]

IMO everyone who turns over more than £20k should be VAT registered. It should be a level playing field for everyone.

And trying to avoid being VAT registered, tbh it'll just cause you more headaches in the long run and you'll always be hitting that ceiling.

Customers don't want hassle, they want you to supply and fit and bill in one go.

 

[Murdoch]

IMO everyone who turns over more than £20k should be VAT registered. It should be a level playing field for everyone.

wow - that would drive tax evasion up massively

I think that the VAT threshold should be higher for 1 man bands and higher again if the person has an apprentice

Being a spark its very easy for me to keep well below the VAT threshold - but guys fitting boilers are in a different ballpark all together - that said I can across a start up GSR a couple of years ago with an employee and he was doing lots of work and his USP was he wasn't VAT reg yet! Not sure that was going to end well

 

[EvilDrPorkChop]

wow - that would drive tax evasion up massively

Do you not think it would do the opposite?

Think of how many people are evading going VAT registered, by whatever means.

 

[Murdoch]

Do you not think it would do the opposite?

Think of how many people are evading going VAT registered, by whatever means.

many VAT reg people take cash now .....

raising the 20% tax threshold to £50k this year is most likely to increase tax take ...

 

[EvilDrPorkChop]

many VAT reg people take cash now ***..

raising the 20% tax threshold to £50k this year is most likely to increase tax take ***

There's more incentive for someone not VAT registered to do that. If your not VAT registered and you're getting your customer to pay for all the materials and just charging for labour - whilst it is legal you could argue that's a form of evasion too.

Just saying, it should be a level playing field for everyone. If you are turning over any decent money (20/30k+) you should be charging VAT. Why is it fair otherwise?

 

[WC1]

Edited and some extra text also

 

[EvilDrPorkChop]

Edited and some extra text also

Think half of your post is missing