The analogy isn’t strictly accurate, but it shows the importance of having money saved to pay for the unexpected. 

Last week’s Heating & Plumbing Show, with host Andy Cam and show regular Todd Glister offered practical advice on managing cashflow, paying the building merchant, and investing for the future.

Here are some key tips from our show hosts.

1 – Protect your cashflow: Don’t use your money to finance somebody else’s project. Covering the cost of a boiler for a week is fine, but don’t buy all materials upfront with your cash. Secure a payment from your client.

 2 – Keep track of costs: Everybody underestimates how much they owe the building merchant. Even experienced tradespeople. Try and keep accurate records so you have an idea of how much you owe. Then add 15-20% on top.

3 – Plan for the worst: Nobody ever thinks they’re going to get injured at work. But tradespeople often are, and they all say: ‘'I'm glad that I had money put aside to tide me over.’

“You have to have something, just in case something bad happens,” said Todd Glister.

4 – Find partners: Partners help grow your business, particularly when you are starting out. Many plumbing and heating engineers sign up with local builders or kitchen installers because they bring in regular work, meaning you don’t have to advertise, or source your own jobs. 

But you need to be clear what you need to be paid, and when. “Once the payment stops, just stop work. Don’t let them dangle that carrot, because sometimes you can end up in hot water,” said Andy Cam.

5 – Invest in property: So, once you’ve made a bit of money, what should you do with it? Well, like Monopoly, invest in property. Both Andy Cam and Todd Glister have built or renovated investment properties.

“It is utilising your skills to your advantage,” said Glister.

“Even though I can't do all of it, I have been in the trade long enough to know bricklayers, roofers. It is a lot easier for us tradespeople to do [it] than a normal person,” he added.

For the full show, click below.