The Cost of Your Business

As I continue to travel throughout the U.S. helping businesses better themselves, I notice there are three major aspects of business that are troubling to most.

1.       Job Costing

2.       Structure/Organization

3.       Sales and Marketing

Each of the three presents a lack of basics, rather, these issues are actually problems because business may lack the fundamental understanding of how to capture costs, develop a “sticking” structure and organization and realize results from so much marketing.

 

In these difficult times, we need to feel better about how our business operates from day-to-day, where some of us are struggling to figure out a way to become more profitable, to be better organized for the sake of our sanity and employees. 

We also desire the ability to actually realize an ROI on all of our marketing efforts.

Some of my client solutions are simple and some of them are very complex.  I am going to try and define a few simple tips in this blog, where I will get into more detailed solutions in future blogs.

Here goes.

Job costing is rather simple in the sense that we simply need to capture data and turn that data into information.  In other words, there will be more work involved in capturing the basic needed to figure costs than actually producing relevant information from that data.

Job costing looks for three variables, rather, we have to recuperate our costs when we sell something and the cost of selling what we sell is imbedded in our operations.

Our operations cost us raw materials (COGS), labor and it’s burden (payroll taxes, worker’s comp, insurance, etc) and our operations cost us a percentage of our entire enterprise, or our building, electricity, general liability insurance, etc, etc.

So, the three variables are:

1)      COGS

2)      Labor (time) & Labor Burden

3)      Overhead 

Once we have captured these variables in the sales price of what we sell, we have won half the battle.  By the way, winning have the battle is called breakeven.  Breakeven is the price that is not a loss nor is it a profit.  In other words, we now have the opportunity to add profit to what we now know is our costs that are covered the second we sell what we sell.

 

More next time.

 www.allectus.com

 

Leave a Reply