Paying it forward: How I saved my business a small fortune

In my particular business I supplied and fitted electric garage doors starting from £895 up to around £2,500. Most people wanted a basic door with a few extras: they paid a little more for the fashionable anthracite colour, often they needed an additional electrical socket, and matching anthracite cladding made it look fantastic.

Here’s how the cost of an average job broke down:

Door: £895
Anthracite: £60
Socket: £50
Cladding: £175
Total Cost : £1,180 (Including VAT)

Here is where it got tricky. Although £1,180 per door may sound good, I was making far, far less on each job.

Here are my costs for that same job:

Door: £695
Anthracite: £60
Socket: £10
Cladding: £100
VAT: £53 (difference between what I pay and can claim back on this job)
Total: £918

£1,180 minus £918 is a profit of £262 per job. Then take £150 for the overhead & indirect expenses like the van, fuel, waste disposal, tools and everything else - that leaves me with a profit of £112 per job. Now we get to the crux of the problem: with traditional payment methods, you pay the transaction fee based on the amount you charge, regardless of your profit!

When the sheer hell of taking cash, cheques and bank transfers had worn me down , I eventually went looking for an online payment processor, I could work with. I scoured the market and quickly realised all the snake-oil salesmen were now working in the merchant services business. I eventually hammered out a deal with Worldpay for 0.9% of the transaction value plus 12p, and I reluctantly signed an 18 month contract.

Let’s work it out:

0.9% of £1,180 is £10.62, plus 12p, equals £10.74 - that’s the cost of processing a payment on a debit card. Let’s not get into credit cards - take it from me, it is significantly more money.

I have a profit per job of £112. So, as a percentage, £10.74 of £112 is 9.6%. I was paying 9.6% of my profit just to take payment. I must have been out of my flippin’ mind!

I’ve always believed that to really understand a job, you have to do it. The old cliche of “to know a man you have to walk a mile in his shoes,” is a cliche because it's true. That’s why I decided for a year I would give up my comfortable office chair and the exciting world of software development, and I would learn how to install garage doors. I wanted to understand the business viscerally.

My plan was to take what I learned after a year and develop software to sell into the industry - I got more than I bargained for. I did learn to install a garage door; and I don’t mind telling you I’m pretty damn good at it. I learned that most customers brighten your day. I learned retired men tend to sit and watch you install the door, while they tell you what they used to do for a living. One elderly lady, to whom I owe the debt I am paying forward, wept inconsolably as I sat in her lounge as she explained - between sobs - that I was the first person she’d spoken to in a month. I didn’t install a door that day. Instead we drank truly revolting tea and chatted.

I came to understand the physical and mental exhaustion of being a tradesman leaves little energy for arithmetic acrobatics trying to work out profit margins and job costing. How simple I had considered that as a software engineer. How blinkered I had been. Fatigue had caused me to make a very bad decision.

I discovered the solution long after I fitted my last garage door. The Wonderful One app allows trades (or anyone for that matter) to take instant payments for a penny per transaction. In my case, that would have been one one-thousand and seventy-fourth of the cost of taking a debit card payment. There’s a 14 day free trial, then a monthly subscription of £9.99 per month for 1,000 transactions. No contract. Transactions are 1p each.

I now pay this forward to you: Wonderful One will save your business a fortune in payment processing fees.

The lonely lady? The experience had shaken me, and I’d been found wanting: I hadn’t a clue how to properly help her. Luck was on my side - a few days later I was quoting one of her neighbours for a garage door. I seized the opportunity and related the story about the lady across the road. By the time I fitted the neighbours door, contact had been made: a group of neighbours were looking out for my elderly lady and including her in their lives.

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