Beyond the tools: Understanding the numbers that drive your trade business

Boxers & Briefs Podcast #9: From tradie to business owners: Understanding your numbers

Karl Martin is a Trades Coach and the Founder of Growth Matters. He works with New Zealand Tradies looking to build growing and profitable businesses and helps them improve cash flow, increase profit, and ultimately understand their business.

“I’m just a tradie, not a businessman.” It’s a phrase Karl Martin hears all too often in his work with trade business owners across New Zealand. But as he points out, every tradesperson running their own operation is, by definition, a business owner – whether they’re comfortable with that label or not.

For many trade business owners, particularly those Karl describes as ‘accidental business owners’, understanding their numbers can feel overwhelming. “If you’re scared of your numbers, figure it out anyway,” Karl advises. “Get someone to help you figure it out. We can translate that so quickly for you and you’ll go ‘Oh, why didn’t I know this before?'”

One of Karl’s most striking pieces of advice might seem counterintuitive: “Don’t worry about your tax, don’t worry about your GST.” He explains that while these are important, they’re simply functions of running a business that can be managed by a good accountant. Instead, business owners should focus on understanding and improving the elements they can control:

• Revenue
• Cost of sales
• Gross profit
• Overheads
• Net profit before tax

Understanding the basics

Karl emphasises that gross margin is one of the most crucial numbers for business owners to understand. Using a simple example: if you invoice a customer $100, pay your employee $40, and spend $20 on materials, you’re left with $40 gross profit. Your gross margin percentage would be 40% ($40 divided by $100).

“Nine out of ten businesses that I go into, the benefits we can gain in the business are at the gross margin line, not in removing operational costs,” Karl notes.

When to grow your team

For tradies wondering when to take on their first employee, Karl suggests looking at ‘overlap’ in time rather than just feeling overwhelmed. He explains: “If we can stretch their hours to 50 hours or 60 hours, which is not uncommon for a lot of these guys, then suddenly we’ve got a 20-hour overlap.” This overlap approach allows for more calculated growth:

• When working 60 hours becomes consistent, consider hiring
• Give the new employee 40 hours
• Use the remaining 20 hours to build more demand
• As demand grows, the cycle can continue

Defining success

“Real success is achieving, building the business to achieve what they want to achieve in the long term,” Karl explains. This might mean:

• Building a business to sell
• Creating employment for family generations
• Achieving a specific lifestyle
• Reaching certain profit targets

Each definition of success requires different business structures, sizes, and margin requirements.

Karl brings a unique perspective to business coaching, particularly for neurodivergent business owners. “A lot of business owners in the trades will say to you ‘hey look, I’m dyslexic and I don’t like numbers’ or ‘I’ve got ADHD’,” he shares. Rather than seeing these as limitations, Karl – who has ADHD himself – views them as potential superpowers that can be harnessed effectively with the right support and understanding.

For trade business owners looking to better understand their numbers, Karl recommends:

1. Keep it simple – avoid getting caught in analysis paralysis
2. Find someone you trust to help translate the numbers into meaningful stories
3. Focus on what you can control in the business
4. Get a good accountant to handle tax planning
5. Don’t be afraid of the numbers – they’re simply tools to help you succeed

“Don’t be afraid, figure it out somehow with someone,” Karl emphasises. And as for those worried about paying tax? “Our whole system is built on us making money and paying tax, so let’s make some more money, pay some more tax, and build these businesses.” For trade business owners ready to take control of their numbers, Karl’s message is clear: understanding your business finances doesn’t require an accounting degree – it just requires the willingness to learn and the right support to make those numbers make sense.