Digitalization is advancing rapidly in all areas of life and work. Modern solutions are also growing in the skilled trades, offering businesses a competitive advantage and customers added value. In this article, you’ll learn what Handwerk 4.0 is, what these technological changes mean in the trades, and what opportunities exist for companies to modernize. We also explain how Stripe can help tradespeople go digital and the benefits of the platform.

What’s in this article?

• What is Handwerk 4.0?
  
• What does the digitalization of the skilled trades mean?
  
• What options are there for digitalizing a business in the trades?
  
• How can Stripe help businesses in the trades with digitalization?
  
• What are the advantages of digitalization in the skilled trades?
  

What is Handwerk 4.0?

The goal of Handwerk 4.0 is to support the digitalization of the skilled trade sector. It describes the use of modern technologies to increase efficiency and adapt to new market needs. It contains digital tools, automation, and connected devices to make craft businesses more flexible and productive.

The concept derives from the term “Industry 4.0” to express the goal of initiating a fourth industrial revolution. It was preceded by mechanization with water and steam power, mass production with electricity and assembly lines, and the technological revolution with electronics and IT. The fourth industrial revolution is now expected to initiate another fundamental change in work processes and production by uniting the real and virtual worlds into an Internet of Things (IoT).

The four industrial revolutions

What does the digitalization of the skilled trades mean?

In Germany, the trades are a central pillar of the economy, with more than 1 million mostly small- and medium-sized businesses playing a significant role in regional value creation. While trades are characterized by manual labor and traditional values, over the years, tradespeople have continually developed new methods and adapted their work practices to changing technologies. Now, digitalization offers new opportunities for progress.

The German Federal Ministry of Economic Affairs and Climate Action (BMWK) defines digitalization as “the utilization of data and algorithmic systems for developing new or enhancing existing processes, products, and business models.” There are four dimensions to this:

• Digital products are data-based, nonphysical, mostly automated services such as software and web applications that are embedded in physical goods or used alone.
  
• Digital processes include data-based representations of reality for process control and organization.
  
• Digital networking is the connection of individual internal and external company processes in overall modern systems.
  
• Digital business models are digital products that businesses provide to customers for a fee.
  

The digitization of the skilled trades involves both the modernization of existing structures and processes and the development of new ways of working and new areas of business. Modern tools and systems can be used in various areas of the craft industry, including planning, production, communication, accounting, and marketing.

What options are there for digitalizing a business in the trades?

The digitalization of a trade business can be implemented at different levels and with other technologies. Here is an overview of some possibilities, as well as a few concrete examples:

Digital processes

Digitalization allows companies in the trades to improve existing tools or create new ones. For instance, pipe cleaning machines or hose systems could be equipped with sensors that measure water flow or resistance. Connected to project management systems, the collected data is immediately transmitted and analyzed. Drones can be used to inspect hard-to-reach areas—for example, by roofers who want to quickly and easily assess possible damage. Augmented reality can be used during assembly or to diagnose problems. The applications for digital solutions in the trades are almost limitless.

Automation of production

Digitalization can also improve the production workflows of craft businesses. Computer numerical control (CNC) machines allow precise control of machining processes. 3D printers can produce prototypes and customized products. Robotics can be used in various ways to manufacture and automate repetitive tasks.

Data-driven decision making

With data analytics tools, craftspeople can quickly and easily evaluate operational data to optimize processes and identify trends. Additionally, the IoT enables real-time monitoring and maintenance by connecting machines and devices.

Digital planning and management

Project management tools can bring project information together in one place to improve project planning, coordination, and oversight. A mobile device can also access dimensions, drawings, or plans directly from the field. For example, maintenance reports or job site logs can be edited on smartphones or tablets, replacing handwritten records.

Automated administration

Invoices no longer have to be created manually and sent by mail. With software, trade businesses can automate invoicing. Furthermore, it is possible to digitalize large parts of the accounting process and simplify financial administration and account management. Periodic posting of transactions and the automation of sales reports is possible with Stripe Revenue Recognition. This offers tradespeople a comprehensive overview of their sales at any time.

Digital communication

Many small businesses now have their own website to promote themselves and provide a point of contact for customers. But there are more options than just an email address or a contact form. One is to have a tool that allows clients to book an appointment directly. These appointment requests can be answered automatically and transferred to the contractors’ calendars. Another option is to implement a customer portal, where they can view invoices or track orders, as an example. Integrating an online shop on the website is also possible, offering products beyond the core business.

Trade businesses need to also consider having a presence on social media platforms. They can use Facebook, Instagram, LinkedIn, and others to provide a glimpse into their day-to-day work, share tips and tricks, or advertise. Value-added content can help retain existing customers and attract new ones.

Digital marketing

In addition to social media, other digital solutions can be used to increase a company’s visibility in the industry and attract customers. These include search engine optimization, online advertising through the use of Google Ads and similar services, and email marketing for automated campaigns.

Training and continuing education

Current or new employees can receive training via e-learning platforms and virtual education courses. Practical training could contain, for instance, augmented reality.

Digital security solutions

With special security software, trade businesses can protect themselves from cyberattacks and data loss. Cloud storage also offers the possibility to store and manage information securely. Moreover, the central storage location allows all employees to have real-time access.

How can Stripe help businesses in the trades with digitalization?

Stripe supports digitalization in the skilled trades in many ways. One option is Stripe Invoicing, which is particularly suitable for tradespeople who rely on a traditional business model but want the benefits of modernization. This tool helps you create and send legally compliant invoices. Invoicing automation simplifies and speeds up your accounting processes. Recurring billing and clear account management are possible with Stripe Billing. You can also access detailed financial and sales reports directly in the dashboard to get an overview of your sales at any time.

With Stripe Payments, tradespeople can digitalize their transaction processes and offer their customers over 100 different payment methods. Payments also makes it particularly quick and straightforward to pay invoices—with Elements, the prepared interfaces; Stripe Checkout, the hosted payment page; or Link, the accelerated checkout flow from Stripe. Accepting and managing transactions saves a lot of time and money with this modern solution.

If you want to integrate payments directly on-site, you can do so with Stripe Terminal. Terminal enables tradespeople to use pre-certified card readers such as the Stripe Reader S700 or mobile devices such as the BBPOS WisePad 3 to accept customer card purchases. Tap to Pay allows cashless transactions without needing an additional device. All you need is an iPhone or Android device to take payments and automatically transfer them to accounting.

What are the advantages of digitalization in the skilled trades?

Seventy-seven percent of German businesses in the trades see digitalization as an opportunity to combine traditional trade knowledge with modern technologies. Here is an overview of some of the key benefits of it in this sector:

• Precision and quality: Using technologies such as 3D printing, CNC machines, or digital measuring systems allow greater precision and improves the quality of handcrafted products.
  
• Increased efficiency: Digital tools and software solutions enable automating and optimizing work processes. Tasks such as job scheduling, material ordering, and accounting can be completed more quickly and accurately.
  
• Cost savings: Automation and more efficient workflows help reduce material and labor costs. Technological planning and management systems also reduce administrative effort.
  
• Flexibility and adaptability: With digital solutions, professional services firms can respond more flexibly to their customers’ needs by offering customized products or support. At the same time, operations can be adapted more quickly to new market needs.
  
• Innovation and new areas of business: Technological advancements open up new opportunities to develop innovative products and services, such as smart home technologies or digital maintenance. The development of new business models, for example via digital platforms, is also being promoted.
  
• Competitiveness and readiness for the future: By leveraging digital technologies, skilled trades companies can strengthen their market position and differentiate themselves from the competition. They will remain future-ready and lay the foundation for sustainable growth and long-term success.