Making More Money! What we all want to do! Part 2 of 3
Making More Money! What we all want to do! Part 2 of 3
These Tips are intended to bring principle and help to us during any season of our business, but especially in a difficult economy. We are moving into spring and this is usually a time for increased business, and hopefully with these tips, you can make this year your most profitable year yet, regardless of what the media has to say about our economy.
This list of Top Ten Tips is going to be focused on some ways to increase your bottom line by getting organized, being focused, and doing some restructuring within your business. Many of these tips are for the business owner, who has all the power to control his company’s destiny.
1. Are you netting a profit each month, and if so, how much? First of all, you will need to be sure that your financials are accurate, reflecting what your real profit or loss is for the month. When your financials are accurate, you can use them to see if your pricing is enough to give you a profit margin and if a profit margin, what kind of one. Sometimes we can have a lot of contracts signed by customers in the wings, making it seem like you have a lot of work, but is that work profitable? Are you under bidding? If we are not reviewing our financials and job costing, we can think we are doing fine, because we have a lot of contracts, but in actuality we are loosing money and going downhill. Sometimes having a lot of work does not make us profitable, and it ends up giving us a false sense of security. We can actually end up paying to work for the customer. Again, you should have accurate financials and job costing in order to be sure that your jobs are profitable. If they are not, then you need to rethink and rebid your jobs accordingly. So the main point is---are you charging enough for your services, are your bids at the proper rate, are your hourly rates at the correct level? This is one way to increase your bottom line right away.
2. The standard formula for determining if you are making a good profit margin is three times the expense, so if your expenses for the month are $30,000, then you will need to bring in a gross revenue of $90,000 to make a 30% net profit margin. This is a good rule of thumb to follow.
3. If you do any kind of service work, it is a good policy to do an anonymous survey to your competitor's once per year to see where your prices fall in the scale of pricing in comparison to your competitor's. Sometimes we can be charging too low and be unaware of it. This survey gives you a good sense of where you lie in the scale, and whether it would be a good idea to raise your rates. For example, if your rates are low by $10 per hour, then you are missing out on an additional $20,000+ per worker to your bottom line each year. Just do the math and you can see how this can seriously increase your bottom line.
4. If you have several categories or classes of income, QuickBooks can track your revenue per income stream. With this tool, you can determine what products or types of services are not at the appropriate income level and which are. So then you can evaluate each source of income as to its value, and then see if you can improve it or if you want to drop it, because you have now found out that it is not profitable. Now that you are reviewing your financials, you can also determine goals for your different income streams.
5. Another way to save money is if you have hourly employees, and they get paid for overtime, have a policy of overtime that is paid at over 40 hrs, not at over 8hrs. This too will add to your bottom line immediately.
6. Be in compliance with your taxes-all categories from quarterlies to income tax to payroll taxes. If you are not and you get behind, this can be one of the MOST COSTLY mistakes of your company's history. This is a good reason to outsource these items to professionals, who will keep you compliant at all times. Finding a good bookkeeping service that can do this at a very reasonable rate, as opposed to a Jr. Accountant in your CPA firm. You may have a relationship with that CPA firm, but for doing things like this, you just need a good professional service and you will end up paying 50% or more less than with your CPA firm will charge you. Think about the amount of dollars added to your bottom line, if you were to do this, as well as the peace of mind, knowing that you are 100% compliant! And think about the consequences and the serious cost to you, if you are not.
7. The old adage of "You have to spend money to make money" is so true, but what you want to do is be careful what you are spending it on. Sometimes business owners just don't get it-you spend a dollar to save a dime. The way you do this is when you, the owner, are doing things you can contract out. Yes, if you keep doing the books, or taxes, etc, you think it is not costing you, but if you add up your cost per hour and what you don't get to do because you are doing these other things, the cost is extremely high, and so--- you spend a dollar to save a dime. So if you were to outsource Payroll and HR Services, for example, you could actually save double digit thousands of dollars in a year and always be in compliance with your taxes and other federal and state regulations, and free up significant time for yourself. Remember the formula, if you were to save $20,000 annually by outsourcing payroll and HR services, this means you do not have to get $60,000 in revenue to cover that overhead expense. This can have serious impact to your bottom line.
8. If your financials are correct each month, and it is good policy to have an audit done each month to be sure (especially if your books are on QuickBooks), then this will save you so much money in the long run. Most business owners or even bookkeepers in small business do not understand that you can make many mistakes in QuickBooks unknowingly, and totally foul up your books. The very thing that makes QuickBooks so easy, is also the very thing that can create problems in that program. An outsourced professional can audit your books for a minimal fee each month, and then you can have the peace of mind to know they are accurate, and you are actually making money each month, rather than hoping you are and hoping your books are correct. This gives you the confidence that you are making accurate decisions regarding the forward motion financially of your company. You cannot put a value on this!
9. If you look at top ten reasons businesses fail, among the top reasons are accounting issues, internal structure issues, cash flow issues, and tax issues. So one simple way to alleviate all of these, and at least make your company safe from these downfalls is to hire a good bookkeeping professional and a good CPA firm for your year end taxes. This is where you wisely spend a dime to save a dollar.
10. Another tip for owners is "Extend beyond your comfort levels." This cannot be emphasized enough. If you want to increase your bottom line, then be willing to stretch a bit and look at all sorts of options on how you can grow your company, save money, outsource, and use your time wisely. One of the main ways companies loose money is by the business owner doing everything but what a business owner should be doing. If you, as a business owner are doing the bookkeeping, the payroll, billings, etc, then you are using your time ineffectively. These are things that you should delegate, whether you hire someone in house, or what is more cost effective, is to hire an independent contractor to do these services hourly for you. Then all you do, as the owner is look over reports and make management decisions regarding the direction of your company. This is very cost effective when you think of the cost of your time and what you don't get to do while you are doing these bookkeeping/accounting functions. There is only so much time in a day, even though we try to make it different, and you should really prioritize your time and do management and financial decisions, not bookkeeping, billings or payroll. Frankly you are better at other things, and it is wiser to pay a little to have someone else do this effectively for you. Be wise in what you do with your time and what you outsource. Sometimes small business owners end up running in so many directions and doing so many things, that you are just not good at anything. Better to focus, and you will definitely need to outsource in order to do this. Wise owners delegate and outsource, in order to make their company strong and going in a focused direction. Owners are to be the driving force of a company, not the one being driven by all the details of the company. To Reiterate----TOP MONEY WASTER IN SMALL BUSINESS is Owners "Flying by the Seat of their Pants" going in every direction at once! STOP! You will never be successful and be able to be strong by doing this. STOP! FOCUS! OUTSOURCE! AND GET ORGANIZED! This is the best money making tip you can have.
Making More Money What we all want to do Part 2 of 3 - To learn more about this author, visit Jacquie M. Adkins's Website.
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This is the 2nd part in our little mini series on the subject that we are all the most interested in doing, which is, “Making More Money!” These tips are meant to be hard hitting, realistic ways to bring in more income and save more money, so that at the end of your month, you see an increase in your bottom line. And isn’t this what it is all about, when it comes to business in our small business world?
These Tips are intended to bring principle and help to us during any season of our business, but especially in a difficult economy. We are moving into spring and this is usually a time for increased business, and hopefully with these tips, you can make this year your most profitable year yet, regardless of what the media has to say about our economy.
This list of Top Ten Tips is going to be focused on some ways to increase your bottom line by getting organized, being focused, and doing some restructuring within your business. Many of these tips are for the business owner, who has all the power to control his company’s destiny.
1. Are you netting a profit each month, and if so, how much? First of all, you will need to be sure that your financials are accurate, reflecting what your real profit or loss is for the month. When your financials are accurate, you can use them to see if your pricing is enough to give you a profit margin and if a profit margin, what kind of one. Sometimes we can have a lot of contracts signed by customers in the wings, making it seem like you have a lot of work, but is that work profitable? Are you under bidding? If we are not reviewing our financials and job costing, we can think we are doing fine, because we have a lot of contracts, but in actuality we are loosing money and going downhill. Sometimes having a lot of work does not make us profitable, and it ends up giving us a false sense of security. We can actually end up paying to work for the customer. Again, you should have accurate financials and job costing in order to be sure that your jobs are profitable. If they are not, then you need to rethink and rebid your jobs accordingly. So the main point is---are you charging enough for your services, are your bids at the proper rate, are your hourly rates at the correct level? This is one way to increase your bottom line right away.
2. The standard formula for determining if you are making a good profit margin is three times the expense, so if your expenses for the month are $30,000, then you will need to bring in a gross revenue of $90,000 to make a 30% net profit margin. This is a good rule of thumb to follow.
3. If you do any kind of service work, it is a good policy to do an anonymous survey to your competitor's once per year to see where your prices fall in the scale of pricing in comparison to your competitor's. Sometimes we can be charging too low and be unaware of it. This survey gives you a good sense of where you lie in the scale, and whether it would be a good idea to raise your rates. For example, if your rates are low by $10 per hour, then you are missing out on an additional $20,000+ per worker to your bottom line each year. Just do the math and you can see how this can seriously increase your bottom line.
4. If you have several categories or classes of income, QuickBooks can track your revenue per income stream. With this tool, you can determine what products or types of services are not at the appropriate income level and which are. So then you can evaluate each source of income as to its value, and then see if you can improve it or if you want to drop it, because you have now found out that it is not profitable. Now that you are reviewing your financials, you can also determine goals for your different income streams.
5. Another way to save money is if you have hourly employees, and they get paid for overtime, have a policy of overtime that is paid at over 40 hrs, not at over 8hrs. This too will add to your bottom line immediately.
6. Be in compliance with your taxes-all categories from quarterlies to income tax to payroll taxes. If you are not and you get behind, this can be one of the MOST COSTLY mistakes of your company's history. This is a good reason to outsource these items to professionals, who will keep you compliant at all times. Finding a good bookkeeping service that can do this at a very reasonable rate, as opposed to a Jr. Accountant in your CPA firm. You may have a relationship with that CPA firm, but for doing things like this, you just need a good professional service and you will end up paying 50% or more less than with your CPA firm will charge you. Think about the amount of dollars added to your bottom line, if you were to do this, as well as the peace of mind, knowing that you are 100% compliant! And think about the consequences and the serious cost to you, if you are not.
7. The old adage of "You have to spend money to make money" is so true, but what you want to do is be careful what you are spending it on. Sometimes business owners just don't get it-you spend a dollar to save a dime. The way you do this is when you, the owner, are doing things you can contract out. Yes, if you keep doing the books, or taxes, etc, you think it is not costing you, but if you add up your cost per hour and what you don't get to do because you are doing these other things, the cost is extremely high, and so--- you spend a dollar to save a dime. So if you were to outsource Payroll and HR Services, for example, you could actually save double digit thousands of dollars in a year and always be in compliance with your taxes and other federal and state regulations, and free up significant time for yourself. Remember the formula, if you were to save $20,000 annually by outsourcing payroll and HR services, this means you do not have to get $60,000 in revenue to cover that overhead expense. This can have serious impact to your bottom line.
8. If your financials are correct each month, and it is good policy to have an audit done each month to be sure (especially if your books are on QuickBooks), then this will save you so much money in the long run. Most business owners or even bookkeepers in small business do not understand that you can make many mistakes in QuickBooks unknowingly, and totally foul up your books. The very thing that makes QuickBooks so easy, is also the very thing that can create problems in that program. An outsourced professional can audit your books for a minimal fee each month, and then you can have the peace of mind to know they are accurate, and you are actually making money each month, rather than hoping you are and hoping your books are correct. This gives you the confidence that you are making accurate decisions regarding the forward motion financially of your company. You cannot put a value on this!
9. If you look at top ten reasons businesses fail, among the top reasons are accounting issues, internal structure issues, cash flow issues, and tax issues. So one simple way to alleviate all of these, and at least make your company safe from these downfalls is to hire a good bookkeeping professional and a good CPA firm for your year end taxes. This is where you wisely spend a dime to save a dollar.
10. Another tip for owners is "Extend beyond your comfort levels." This cannot be emphasized enough. If you want to increase your bottom line, then be willing to stretch a bit and look at all sorts of options on how you can grow your company, save money, outsource, and use your time wisely. One of the main ways companies loose money is by the business owner doing everything but what a business owner should be doing. If you, as a business owner are doing the bookkeeping, the payroll, billings, etc, then you are using your time ineffectively. These are things that you should delegate, whether you hire someone in house, or what is more cost effective, is to hire an independent contractor to do these services hourly for you. Then all you do, as the owner is look over reports and make management decisions regarding the direction of your company. This is very cost effective when you think of the cost of your time and what you don't get to do while you are doing these bookkeeping/accounting functions. There is only so much time in a day, even though we try to make it different, and you should really prioritize your time and do management and financial decisions, not bookkeeping, billings or payroll. Frankly you are better at other things, and it is wiser to pay a little to have someone else do this effectively for you. Be wise in what you do with your time and what you outsource. Sometimes small business owners end up running in so many directions and doing so many things, that you are just not good at anything. Better to focus, and you will definitely need to outsource in order to do this. Wise owners delegate and outsource, in order to make their company strong and going in a focused direction. Owners are to be the driving force of a company, not the one being driven by all the details of the company. To Reiterate----TOP MONEY WASTER IN SMALL BUSINESS is Owners "Flying by the Seat of their Pants" going in every direction at once! STOP! You will never be successful and be able to be strong by doing this. STOP! FOCUS! OUTSOURCE! AND GET ORGANIZED! This is the best money making tip you can have.
Making More Money What we all want to do Part 2 of 3 - To learn more about this author, visit Jacquie M. Adkins's Website.
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Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
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Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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