Your Job Shop May Be Profitable, But Are Your Jobs?

Growth and Profitability are always exciting; especially in the economic turmoil we have been facing for quite some time now.  A lot of small businesses will take what they can get.  When I speak with job shop owners, I find that their business is doing well, but when asked if they know what jobs are making them profitable, typically they can’t answer.

I like to equate it to the person who saves money every paycheck, but then spends $50 a week at Starbucks. It’s like taking two steps forward and one step back. 

Looking at monthly financials isn’t enough.  You need to enter your job estimates and track your job costs in order to see where the differences are and analyze why.  You may end up finding out that you should eliminate certain jobs.

Material, labor, subcontracting, freight and site services account for most job costs.  With historical data from these areas, you can determine:

• The actual costs at the end of the job
• How well the job was priced based on the original estimate
• Which customers and jobs are profitable and if you should take on the job again
• Pricing for the same job the next time around

At the end of the day, tracking actual job costs against budget will tell you how much you made or lost.  Not only that, but by tracking and analyzing costs you may be able to make profitable jobs more profitable.

By Competitive Edge Services, provider of Microsoft Dynamics NAV to job shops in Massachusetts and throughout New England.