Better project management for trades and manufacturers
Concerned you’re losing precious profit margin?
As a business owner, there is a constant juggling act to get your numbers to work as hard for you as they can.
The more you understand your numbers the more it can help you drive the direction of your business.
We can start the analysing of your figures in the following way
|Top Line||Revenue – Income generated from what you sell|
|Above the Line||Cost of Goods sold / Direct Costs
What it costs to create the revenue.
|Gross Profit||Revenue – Direct Costs|
|Below the Line||Overheads – what it costs just to be in business|
|Bottom Line – Net Profit||Gross Profit – Overheads|
Regular review of your overheads is an important part of business
You should be looking for items that are no longer necessary, too high in price or open to efficiencies then find a way to remove all or part of that cost from your business – doing this has an immediate impact on your business or ‘bottom line’ without any change to sales.
It is a good financial habit to review your overheads as least every 12 months. There is a limit to how much you can reduce your overheads and at some point, you will not find any more monetary benefit.
But perhaps even of more importance is to review or monitor your direct costs on a proactive basis.
If you are purchasing items for resale (retail) or purchasing a combination of parts that form a larger item (manufacturing) and on-sell, your business is going to be highly sensitive to any price increase.
You need to be aware of what your inputs have cost so that you can ensure you are quoting your customers the correct sales price and able to deliver the profit margin your business requires to cover your overheads and put more money in your pocket.
When you start to look closer at different items you sell, you may find there are certain items that are time-consuming to create or install and in fact the profit margin on them may be lower than expected.
It may be time to review if you should be still offering that service or product, or if you should just be focusing on what makes you the best return.
There has never been an easier time to take this ‘deep dive’ into your financial figures as all the necessary components are at your fingertips.
At Carrick Aland Accountants, we can assist you to:
- See an up-to-date view of your business financials in real-time, which provides a full view of your business performance.
- Be able to drill down on the figures and see what items are costing you.
- Easily collaborate with your team working out on jobs using a mobile app that sends you up-to-the-minute time tracking.
- Assist you with cash flow and point out where the cash is stuck