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6 Steps To Laying Out Your Competitive Strategy
Why do so many companies languish and watch as their business turns into a zero profit zone, while others seem to thrive?
When you look at your business, whether it’s a new venture or a company with a long history, can you answer the...
A POWER TECHNIQUE FOR BOOSTING SALES
So you've built your site and started to promote it. You're getting some sales, but you want to generate more.
There is one simple sales technique that almost every Internet marketing expert agrees will DRAMATICALLY boost your sales every single...
Boost Your Business Sales With Credit Card Payment Solutions
According to searchmerchants.com, Accepting credit cards is the most well known way to accept payment on the Internet. Almost everyone has a credit card and by accepting his or hers, it makes customers' ordering process much more convenient and time...
Is Your Company Growing Fast Enough for You?
Are you frustrated by the lack of growth in your firm, or the effort required to squeeze any up-tick in performance? Are inadequate policies and procedures a root cause? To find out, take this simple self assessment to see if this may be...
Overcoming Barriers to Sales
Ever thought to yourself, "If only my team members would complete the tasks that we mutually agreed to in our action plan."
Most managers have felt this way about certain employees at some point in time.
Let's face it, some...
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Is Your Business Profitable?
Copyright 2005 Pam Newman
What’s your job profitability? Do you know?
Many business owners are unsure of their profitability at a company or job level. They “think” they are making money because they have a few dollars in their checking account. Having money in your checking account doesn’t mean you are profitable. It might simply mean you haven’t paid all the bills yet, so you have a little cash. Cash and profit are two different concepts. If you don’t know your exact income and expenses for each job and your overall business, then how can you know whether you are making a profit? And, if you aren’t profitable, your business won’t last long.
Analyze Each Job
Regardless of the size of your business or your industry, profitability is something you should be monitoring on a monthly basis. To determine your profit, you must know how much you make and spend on each job. Expenditures should be tracked for direct labor and material costs on each job. In addition, you should also be tracking overhead costs and allocating them to your various jobs as applicable. There is always going to be some general overhead, but too often dollars are thrown into general overhead, when those dollars could easily be attached to specific jobs.
Intuit’s QuickBooks software program has easy-to-use features that allow you to do job-costing for time and materials, so you don’t have to worry about having to track it all manually. Rely on tools to help you run your business more efficiently and effectively.
Are you curious how you are doing with job costing measurements? Here are some quick and easy questions to gauge your job costing performance:
1. Do I track each customer’s revenue information through a detailed invoice?
2. Do I have a way of breaking down my direct job materials cost by customer?
3. Do I associate all time spent to each job accurately with actual dollar amounts?
4. Do I have access to reports to monitor profitability on each job in a timely manner?
5. Do I have a way to trend the fluctuations in job profitability from job to job, month to month, etc?
If you answered “no” to any of these, then it’s time for you to take an objective look at your financial goals. It’s time for you to implement a job costing mechanism to help you answer “yes” to all these questions. How can you track your profitability and long-term growth plans if you don’t have detail at a job level?
QuickBooks Can Help
Here are some easy ways to utilize QuickBooks effectively to help you with your job-costing process:
1. Set up the QuickBooks Item list so that you’ll have both an expense and an income aspect to each of the items. This will allow you to track your costs and your income, and will provide you profit by item.
2. Record your sales through the invoicing or sales receipt process. This will record the income aspects of the items.
3. As you purchase the product or service items, make sure that you utilize the Items tab so that it will record the cost to the appropriate item. In addition, make sure to assign your customer/job information to each line item so that you’ll have the costs associated to the appropriate customer/job for job-costing.
4. Utilize the time-tracking mechanism in QuickBooks so that you and your employees can track time by item and customer/job. No dollar value is associated with this time until you actually pay the employees within QuickBooks.
5. QuickBooks has preformatted reports that you can access to have job-costing information right at your fingertips. These are found under the Reporting menu and the Jobs/Time/Mileage option.
6. QuickBooks has the ability to provide reports for any time period you select. This will allow you to have a variety of detail over the growth of your business and to produce trending reports. You can modify the report as needed to meet your needs.
A good accounting professional can help you understand what these reports are telling you, in terms that you can use. Reports alone don’t provide value if you don’t understand them. So it is key that you understand the reporting information and how you can use that information to assist you in decision-making as you grow your business profitably.
Job-costing is easier when you set-up your accounting/bookkeeping software package and know how to use it. So, challenge yourself today to become more adept at running a financially savvy business through job-costing. Then, you’ll know, without a doubt, whether your company is profitable.
Pam helps business owners keep money from slipping through their fingers. She is a Certified Management Accountant, Certified QuickBooks ProAdvisor, and Author of Out of the Red and Unlocking the Secrets of QuickBooks. For more information, you can visit our website at http://www.quickbooksinformation.com
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