Don’t confuse profit with salary or hourly wages. Making a profit isn’t optional: Your business needs profit to survive.
Accounting
Taxes and Profit and Markup
Michael addresses a few different questions we’ve heard recently, primarily dealing with taxes and profit and calculating your markup.
Know Your Numbers: Current Ratio
There is a measure you can use to determine how financially solid your company is at any given point in time. It’s called the current ratio, and it’s a good idea to check it regularly.
Estimating, Labor Burden, and Cost of Goods Sold
When you own a small business you wear a lot of hats. Understanding the numbers might not be your favorite hat, but numbers are important because they show where you stand financially.
What Should You Do With Your Profit?
The best way to avoid paying taxes is to not make a profit at all, but it’s a rough way to live.
Profit and Loss and Markup
When your books are set up properly, it’s easy to calculate your markup, and it’s also easy to compare your actual results to your estimates.
Calculating for Taxes
Taxes are the price you pay for being profitable. It’s a good thing when your business is in the black and you need to pay taxes on it. It’s not good when you’re taken by surprise.
Construction Business Safeguards: Fraud and Embezzlement
We hear many stories from business owners who have had to recover from the theft of funds by their own employees. Today we’re sharing a list of things you can do to protect yourself and your business.
Setting Funds Aside
An Operating Capital Reserve Account helps keep you and your family free from financial worries, which helps you sleep better.
Job Costs and Overhead
I’ve seen contractors try to apportion overhead on a daily basis when compiling their estimates. Others try to apportion overhead on a weekly, monthly or per job basis. I don’t recommend any of those approaches.
Long-Term Business Survival
How well you manage your money when business is good impacts how easily you’ll survive when business is tough.
A Collection of Thoughts: Bookkeeping, Markup, Taxes, Advertising . . .
This week I want to catch up on a few things that have been bothering me.
Accounting – Keeping Track of Your Jobs
It’s easy to know if you’ve made a profit when every transaction is complete in a day. It isn’t as easy in construction, where a job might take a week, a month, or even more than a year to complete.
What’s Your Labor Rate?
Why is it important to know the burdened labor rate when you estimate your work? Because the labor burden cost is the one that often falls through the cracks.
Paying Yourself
You’re in business to provide a service and make a profit doing it. Having the financial info you need to make decisions is critical for your business success.
Prepare For Cash Shortfalls
You need to have enough cash on hand at any point in time to pay all your bills, but sometimes the cash flowing in stops.
Know What You Need, and When
In order to have a positive cash flow, it helps to know what your cash needs are today, in six months, and a year from now.
Recover Overhead and Profit in your Labor Rate
There are four basic ways to charge for construction services. These are fixed fee or lump sum pricing, Time & Material pricing, Cost Plus, and using an hourly rate.
Plan a War on Debt
We encourage every coaching client to stop using credit cards. Cut them up, throw them away, call the company, cancel the accounts.
Overhead Expense Reductions
If you are wondering how to reduce your overhead expenses, we received the following list sometime ago from Morris DeShong. It's a great starting point.
