How to Increase Profit as a Trades Business

You are busy. Your phone is ringing. Your calendar is booked three weeks out. Your van is on the road five days a week. You are doing the work, getting paid, and the money is coming in.

So why do you feel like you are not getting ahead?

Here is the thing most trades owners do not talk about at the kitchen table on a Sunday night: turnover and profit are not the same thing. Your bank balance can look healthy while your actual profit is razor-thin. You can be working sixty hours a week and still go home with less money than someone working forty hours doing the right jobs at the right price. Understanding how to increase profit as a trades business is not about doing more. It is about doing the right thing, the right way, with the right numbers behind you.

I worked with a heating engineer last year who was turning over around £180,000 a year. Good money coming in. Busy man. But when we looked at his actual profit, after all costs, it was less than £24,000. He was exhausted and broke at the same time.

The difference between turnover and profit changed everything for him. It will change everything for you too.

When you understand how to increase profit as a trades business, you start making different decisions. You stop saying yes to every job. You raise your prices. You spend time on the customers who are actually worth your time. You work less and keep more. That is the real game.

The difference between turnover and profit

Let me explain the basic equation first, because it matters. Turnover is all the money that comes into your business. Profit is what is left after every single cost comes out. Rent, materials, van, insurance, fuel, team wages, phone, software — everything.

A lot of trades owners chase turnover. It feels good. It looks good. Your accountant gives you a nice big figure at the top of your accounts. But turnover does not keep you alive. Profit does.

Consider this scenario. Two plumbers both turned over £150,000 last year. Same figures. Same headline number. One kept £38,000 as profit. The other kept £12,000.

Same business size. Different lives.

The one who kept less profit was working more jobs, undercutting on price, buying materials without thinking about cost, and had a team member on wages that should have been removed months ago. The one who kept more profit was selective about which jobs he took, priced properly, managed his materials costs, and worked with a reliable subcontractor instead of a problematic team member.

Same turnover. Very different profit. Very different stress. Very different lifestyle.

Here is what most trades owners get wrong. They think the answer to making more money is to get more jobs. More jobs means more turnover. More turnover feels like success. But more jobs can also mean more costs, more time, more stress, and sometimes less profit.

You can increase profit without increasing turnover. Let me show you how.

How to increase profit as a trades business: focus on the right customers

A few years ago I worked with a bathroom fitting business. The owner had about sixty regular customers on his books. They were good customers, reliable, nice people, repeat work coming in. His turnover was solid. His profit was not.

We did a simple exercise. We looked at where the profit actually came from.

Eighty percent of his profit came from twelve of those sixty customers. Twelve. Out of sixty.

The remaining fifty customers were costing him almost as much to manage, follow up with, and service as they were bringing in. One customer in particular was a nightmare. Always wanted extras unpaid. Always had callbacks. Always argued about the invoice. And he was spending almost two hours a week managing that one relationship.

Once he saw those numbers, the decision was obvious. He rang ten of those low-profit customers and politely told them he was no longer taking on new work in their area. He let the nightmare customer go. He spent the time he freed up doing what he actually wanted to do: focusing on the profitable customers and raising his prices.

His turnover dropped by about twelve percent. His profit went up by thirty-five percent. Same hours, much better life.

That is what happens when you stop chasing turnover and start chasing profit.

What should you actually measure to increase profit as a trades business?

Stop measuring turnover. That is the first step. I know it sounds mad, because turnover is the number your accountant gives you, and the number feels big and impressive. But it is not telling you the truth about your business.

Start measuring these instead.

Profit per hour. This is simple maths: your actual profit divided by the number of hours you worked. A heating engineer I worked with thought he was making £40 an hour. When we actually calculated it, he was making £12 an hour. Same as minimum wage for a skilled tradesperson. Once he knew that number, he made decisions to fix it. Raised prices. Cut unprofitable jobs. Brought in a team member so he could work on the business instead of in it. His profit per hour is now £52.

Profit per job. Some jobs are killers. They take longer than quoted, the materials cost more than estimated, the customer changes their mind halfway through, there are callbacks. You end up doing two days of work for one day’s pay. Track this. Know which job types are money-makers and which are money-losers.

Profit by customer. Do exactly what I did with the bathroom fitter above. List your customers and the profit each one actually brings. Not the turnover. The profit. You will be shocked. Some of your nicest customers will be your least profitable. Some customers you have not even thought about will be gold.

Consider this: your fixed costs are your enemy

Every business has costs that do not change. Rent on your office, if you have one. Insurance. Phone contract. Accounting software. These are fixed costs. They exist whether you do one job or ten jobs.

Here is what makes fixed costs matter: they push you into a corner.

If you have £8,000 a month in fixed costs, you have to earn at least £8,000 a month in profit just to cover them. If you are not careful, you end up pricing your jobs too low just to hit that number. You work more to earn less. You say yes to bad jobs because you have to hit your target.

A decorator I worked with had moved to a fancy office space. Rent was £1,500 a month. He thought it made him look professional. In reality, it meant he had to take on every job that came his way, because he had to cover that rent. He was working weekends and nights just to stay level. He was not actually making more profit. He was just paying more in rent.

He moved to a smaller space. Shared office. £400 a month. Suddenly he could be selective about jobs. He could take time off. He could raise his prices because he did not need volume to survive. His actual profit went up, not down.

Look at your fixed costs. Really look at them. Ask yourself: am I paying for this? Or am I letting this dictate which jobs I take?

The real way to increase profit as a trades business

Here is what changes everything. It is not complicated. It just requires you to stop for an afternoon and look at your actual numbers.

Do this:

1. List every job you did last month and what you actually made on it after costs.

2. List every customer you work with and rank them by profit, not by turnover.

3. Calculate your profit per hour on your busy weeks. Be honest.

4. Look at your fixed costs. Are they too high? Are they forcing you to take bad work?

5. Identify which three things are costing you the most money. Is it materials markup? Is it wasted time on callbacks? Is it an unprofitable team member or subcontractor? Is it a customer who always changes their mind?

Once you know the real numbers, you can make real decisions.

Raise your prices. You have more room than you think. Stop taking jobs from customers who do not respect your time. Cut out the work that is genuinely unprofitable. Invest in the team member or subcontractor who actually works smoothly. Spend time on the customers who make you money. Let go of the ones who do not.

This is not ruthless. This is survival. This is what it means to run a business instead of just doing jobs.

The takeaway

Busy is not the same as profitable. Turnover is not the same as profit. Your bank balance is not the truth. Your profit per hour is the truth. Your profit per job is the truth. Your profit by customer is the truth.

Once you know those truths, everything changes. You stop saying yes to every job. You stop undercutting your own prices. You stop tolerating customers or team members who do not add value. You start building a business that works for you instead of a business that exhausts you.

This is just the beginning. If you want to understand all nine drivers of profit and how they work together as a system, I have written about this in detail in The Systems Handbook, which covers how to build a genuinely profitable trades business from the numbers up. You can grab a copy from Amazon at https://amzn.to/45aMvUH. The Systems Handbook and The Quote Handbook https://amzn.to/3WzrTkJ are the detailed roadmaps for exactly this kind of thinking.

For now, grab your bank statements from last month. Look at the numbers. Start asking yourself which of your jobs and customers are actually making you money. That conversation with yourself is worth more than any hourly rate.

If you want to talk through how to apply this to your business, or if your numbers are a mess and you need help sorting them, get in touch at info@togetherwecount.co.uk or connect with me on LinkedIn at https://linkedin.com/in/aaron-mcleish. We can help.

Aaron McLeish, Managing Director

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