Here they are:
- You won’t run out of cash without knowing you are running out of cash.
You track your current ratio trends (current assets to current liabilities). If it is decreasing find out why – is profitability decreasing? Are your receivable days increasing? Are you buying too much inventory? Or, some other reason?
- You’ll know when you are paying your employees for non-productive hours.
You track the billable hour percentage for all of your revenue producing employees. If the percentage is under 75%, you take action to discover why. Vacation? Training? Too much shop time? Callbacks? Or, some other reason?
- You’ll know whether your jobs are really making a profit.
You track overhead cost per hour (for every billable hour how much overhead needs to be added before calculating profit?) and net profit per hour (i.e. for every billable hour how much profit dollars drop to the bottom line?). You job cost your jobs and make sure your crews produce the net profit per hour you want.
- Your employees know what their KPI’s are, their bonuses for exceeding them, and what happens when they don’t meet them.
There are no surprises when it is review time. Everyone has a job description and what is required for that position.
- You’ll have a tool (i.e. your business) to do what you want to do, when you want to do it, without worrying about money.
It’s easy to have a financially fit business. It’s easy not to. The choice is yours.
If you want the on-line course, manual, and templates on how to do it, click here.
If your business is financially fit and you want an easy way to track your financial results each month to make sure your trends are going in the right direction, click here.
Ruth King is well known as “The Profitability Master.” She is passionate about helping small business owners become profitable and stay profitable. For over 40 years she has coached, trained, and helped contractors and others achieve the business growth and goals they wanted to achieve.
Contact Ruth by emailing ruthking@hvacchannel.tv.
