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.
Copyright 2005 Pam Newman
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
apartment cleaning near Highland Park ..Small business owners can relieve a lot of their own... Read More
And is having a logo really that important?My answer to... Read More
As a practitioner and student of Small Business Marketing, I... Read More
You know your prospects need what you sell. You know... Read More
Setting priorities in your business? Your first job is to... Read More
Think of your business as a living, breathing, organism. It... Read More
What is the best time to expand a mobile car... Read More
There have been many great points raised on both sides... Read More
Most small business owners are faced with so many responsibilities... Read More
"I don't know the key to success, but the key... Read More
1. Don't Spend Too Much Time PlanningWhen you are entering... Read More
The home-based business market, sometimes called the SOHO (small-office/home-office) market,... Read More
With the massive explosion of start-ups and home businesses developing,... Read More
The Dynamics of Daylight Savings Time changes the way we... Read More
Many companies wish to expand and a few wish to... Read More
I propose this thought on the subject of Franchisee territory... Read More
There are no "rules of thumb" in the pursuit of... Read More
Some things in business are relatively easy to measure ?... Read More
Ask anyone trapped in a cubical about their entrepreneurial dream... Read More
Yes, that IS security when nobody can downsize you because... Read More
In the heavy equipment cleaning business you can make good... Read More
1. There Are No "gimmes" ? They count two-foot putts... Read More
Q: A friend told me that as a woman of... Read More
1. Know Where You're Going ? Coach Herb Brooks had... Read More
How do you find groups that are in need of... Read More
cleaning lady near Arlington Heights ..So it's time to invest some finances into advertising your... Read More
In a perfect world, starting a small business would be... Read More
Why does research and education play an important part of... Read More
Do you spend every waking minute in your business? Do... Read More
If you are in the professional car care business you... Read More
Expanding your business requires you to take a good hard... Read More
Auto detailers are often asked to clean boats and detail... Read More
How far away is the person you need to meet?We... Read More
Security Professionals provide the products and services necessary to create... Read More
When you go into business for yourself, there are many... Read More
Most small business owners are faced with so many responsibilities... Read More
Back when I owned an inventory-based business, one of my... Read More
Seems as though there are a lot of business closings... Read More
I agree that knowledge should be free, but the next... Read More
You know your prospects need what you sell. You know... Read More
For many small businesses, the "S" corporation is the business... Read More
What are the benefits of using a Freelance Consultant /... Read More
Most smart entrepreneurs and all large corporations have Employee Relations... Read More
A consultant must remember that the business belongs to the... Read More
The efficiency of debt collection is the difference between a... Read More
Part of the power plan is making sure you have... Read More
Should your business have a toll free number for customers... Read More
We have all seen the mobile washing units cruising our... Read More
WHEN you are operating or planning a small business that... Read More
Perhaps you are building a new home office or you... Read More
Small Business |