You’re probably like most business owners that came from the trade. You’re awesome at the technical and sales aspects of the business but you probably don’t like the numbers. You want to know how your business is doing but don’t want to go through a bunch of reports and statements to get it.
We hear you. That’s why we made it simple. Super simple even.
You can understand the health of your business by knowing just 8 numbers other than your sales. You already know your sales. You just need to know these eight numbers as a percentage of your sales. (Percent of Sales Calculation reminder: Category totals divided by total sales.)
Here’s those 8 numbers and the “Good” and “OK” amounts for each.
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#1: Labor – Good 15%. OK 17%.
This includes all your of field labor.
#2: Materials – Good at 15%. OK 17%.
This includes all the parts, equipment, and supplies you use on jobs.
#3: Trucks – Good 5%. OK 7%.
This includes all your truck expenses like fuel, oil changes, maintenance, and repairs. This does not include paying note payments for trucks.
#4: Advertising – Good 6%. OK 8%.
This includes all marketing and advertising expenses.
#5: Overhead Labor – Good 8%. OK 10%.
This is all wages for office, management, and salaried workers.
#6: Operating Expenses – Good 20%. OK 22%.
This includes office expenses, rent, utilities, training, etc.
#7: Other Expenses – Good 10%. OK 12%.
This includes commissions, subcontractors, and everything else not in another category above.
#8: Net Profit -Good 22%. OK 7%.
This is the net profit left over for every dollar of sales. Remember that this number needs to be high enough to pay your debt, handle unforeseen expenses, and to save for a “rainy day”.
So there’s the eight numbers you need to know. Super simple style. We also made a video and an infographic you can download free.
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