I continue to be amazed at how many companies, especially startups, have no idea of their costs, profit margins, etc. Although a startup is primarily challenged with acquiring business and growing, they need to have a clear idea of the work being perform, real costs and what is their true profit margins on a daily and weekly basis. 

 

The challenge may simply be that the owner/operator may be great at stripping/recoating floors but not so good at managing the books. Such an approach can be disastrous. 

 

Please consider the following points:

 

1. Research a bookkeeping system (manual or electronic) that is relatively easy to use and designed to grow as you grow.

2. This system should have some means of writing checks (in a separate checking account from your personal funds) so that you can track all your expenses including labor, withholding taxes for employees and other business related costs.

3. This system should have the ability to generate invoices, statements and at least basic income statement and balance sheets. 

4. Be sure to track profit/loss per job/account since each must pay their own way.

5. If you simply are not good at inputting data, find a family member or better still, hire a clerical person to assist.

6. You might also consider outsourcing your bookkeeping to a third party service that would not have any authority to issue checks without your signature.

7. Keep track of annual and/or monthly obligations such as insurance, 941 tax payments and other expenses that can sneak up on you if not visible and anticipated.

 

Although you may “feel” like you are making money, you need to know what your true profit is after all your related expenses are captured. 

 

Your comments and questions are important. I hope to hear from you soon. Until then, keep it clean…

 

Mickey Crowe has been involved in the industry for over 35 years. He is a trainer, speaker and consultant. You can reach Mickey at 678-314-2171 or CTCG50@comcast.net.


posted on 9/10/2014