Job costing is the best way for you to increase your profit and cash flow. This means you need to track the profit of individual jobs. For example, any single job may involve differing costs of labour and materials. You need to work these out and allocate the materials and labour to each job. Once you have completed this task you need to make sure you can easily see the breakdown of invoices and expenses on the job. That way you can work out your gross profit margin.
Boosting profit should be the main aim of a business owner. Whether you have a trade business or you operate in another industry, you should have the goal of boosting the profit of your business. In too many businesses, especially with turnover between 1 and 5 million, the net profit margin is far too low or even non-existent. The main trap the owner or the entrepreneur falls into, is to think that growing revenue and boosting sales will help them get to this magic profit target. In actual fact, usually this method of approach does not work and only compounds to the problems of an unprofitable business.
This information is designed to give you insight into why it is important to decide where you want to be positioned in your market. This positioning happens through your pricing policy. You’ll find out what establishing pricing policy involves for your business and what it could mean to your future.