How Job Costing Changed My Life and BusinessNov 18, 2022
Many business owners I talk with feel like they're not as profitable as they should be. Their revenue is often substantial, but their profitability is lower than they would like. This is often related to not being set up to be able to job cost – and as a result, not reviewing the financial performance of their individual jobs. Today I'll talk about how job costing has transformed my business.
When I started my business, it was just me doing all the selling, estimating, bookkeeping, producing the work – everything! I was very profitable in the beginning, and I was excited to grow the business and bring on some team members. However, my profitability started to tank. I quickly realized it was critical to job cost to understand my labor and materials budget and compare it to reality. From there, things began to change for me, but before I share how job costing changed my life, know that you can reach out to me if you'd like to learn how I help my clients and how I can do the same for you.
Here are the changes I noticed once I started job costing:
1. I wasn't in the dark anymore. This was huge for me. It was so great to truly understand my numbers and not just wonder what was going on financially.
2. The team pulled in the same direction. The team finally knew what the financial targets were. The team was also much more engaged because they were part of the goal-creation process and all driven by the same metrics.
3. Finances were consistent and stable. From a financial standpoint, it was a game changer. I was able to have a consistent six-figure income, and when I finally sold the business, it had significant value. If you don't already know, restoration businesses are typically valued at a multiple of profitability.
So how do you job cost? To do this, you need to set up your accounting system in a way that you'll be able to track labor and materials to jobs. You also need to get into the discipline of reviewing every job in your company as a whole, month by month.
Job costing changed not just my business but also my life. It has given me a fresh perspective from an engagement and a culture standpoint. If you have any questions about how I might be able to help you with job costing, increasing profitability, or preparing your business for an eventual sale, call or email me. I'm looking forward to talking with you.
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