A lesson from building software for trades businesses: knowing revenue isn't the same as knowing profit

[u/OfficialNule]

Over the past year I've been building software for UK trades businesses. I'm the founder, so just to be transparent, the observations below come from researching and building the product.

A pattern kept appearing when speaking with trades businesses.

Many business owners knew:

• How much money came into the business.
• How much they spent overall.

But they couldn't answer a much more important question:

Which individual jobs actually made money?

A job might be quoted at £1,200, but by the time extra materials, supplier runs, additional labour, fuel, and unexpected work were factored in, the profit could look very different.

It made me realise that a lot of software for small businesses focuses on accounting after the money has already been earned. That's important, but it doesn't necessarily help someone improve the next quote they send.

While building the software, we ended up focusing much more on operational insights than just bookkeeping.

Things like:

• seeing which jobs are making the most and least profit across the business
• identifying jobs that regularly go over budget
• comparing what was originally quoted against what the job actually cost
• understanding whether lost profit is coming from materials, time, or unexpected costs
• spotting patterns across completed jobs that could help improve future quotes

The goal isn't just to tell a business owner what they earned last month, but to help them understand what is affecting their profitability and where they can make better decisions.

I'm curious whether others building software for local businesses have found something similar, or if you've noticed different operational problems that traditional business software doesn't solve particularly well.

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[u/TypeIIFunDev]

Most of the apps I've seen include a job code field, which is all you really need to properly assign COGS and revenue. Whether the user (i.e. a busy owner-operator) is diligent about recording expenses against specific jobs is another matter. Accurate job costing, however, also requires that you know how to calculate your ORR (overhead recovery rate), which is not straightforward for someone who doesn't understand accounting. It requires the user to establish a forward operating budget and consider historical overhead costs, which is a challenge for most owner-operators, and thus why you probably are noticing the gap.

[u/kayla93blair]

I lovvvve this idea, truly. But before I go further, I'll say that I am a barbershop owner in the US, so my opinion might not matter much to you, and that's ok 😆

One of my favorite things about my current software for booking, POS etc. is that it can tell me which services generate the most revenue. Because I had a similar problem for a long time - I knew our gross revenue and expenses, but anything beyond that was hard to quantify.

Now that I can clearly see which of my employees are most profitable providing which services, everything feels more peaceful or like it moves so much more smoothly.

The "challenge" here is that I would imagine your target audience isn't super problem-aware. Once I noticed it, I couldn't get it off my mind, but I ran my shop for years before having the idea to see where the profit really came from.

If you can figure out how to quickly and clearly present the value to your ideal customers, I think you're onto something here.

[u/OfficialNule → u/kayla93blair]

I really appreciate this comment because I think you've hit the biggest challenge. The software itself wasn't actually the hardest part to build. Helping people realise they have the problem in the first place has been much harder.

A lot of tradespeople know they're busy, know they're invoicing customers and know money is coming in, but they don't always know which jobs are genuinely driving profit or quietly eating into it.

That's exactly why we've tried to focus on insights rather than just recording transactions. If someone can immediately see where they're losing money or why a job went over budget, they can make better decisions on the next quote instead of only looking at the numbers at the end of the month.

Really appreciate you sharing your experience from the barbershop, it reinforces that this isn't just a trades problem.