If you are a contractor, interior designer, event planner or any other service business that does projects you are going to want to make sure that you are not spending more on the job then you are making.
If you are a QuickBooks user you can pull your profit and loss report and it will tell you whether or not your business is making a profit. According to that report your company very well may be making a profit but how much more profit could you make if you kept a close eye on how much you are charging for a job vs how much you are spending on the job?
Keeping track of job costs does not have to be complicated. All you really need are the receipts, the estimate and a calculator.
Figuring Job Costs-Old School
- Create a file folder for each customer and put a copy of the estimate in the folder
- When you purchase something for that project put the receipt in that folder
- Once the job is completed, add all of the receipts together
- Pull the estimate out of the file folder
- Subtract the total of the receipts from the Estimate
- That will be the total profit
Figuring Job Costs-Excel
- Keep each customers receipts separate from others
- Create a spreadsheet with customer name
- Add the estimate to the next cell under the name
- In the next column start inputting the sales receipt totals (new receipt per cell)
- After the last receipt is entered in the next empty cell use the addition formula
- In the next open cell use the subtraction formula in Excel
- The total after the subtraction is the total profit you made on that job
*Now you could also take and use QuickBooks to keep track of job costs and while it is more complicated to set up getting the results is easier. If you want to know how to set up job costs within QuickBooks send me a quick email and I will see what I can do to help you.
So how does knowing this really help you, you ask….Simple if you notice that you are losing money on jobs you can use this information to go back and figure out where that money is going. Maybe a subcontractor is more expensive than you thought, maybe the price for that piece of equipment was higher than you thought, maybe the job is taking longer than it should. No matter the reason keeping tables on job costs will help you figure it out.
Now if you notice that you are losing money on a couple of jobs, don’t panic because that is going to happen because you might have a difficult client that kept “sabotaging” your attempts to do the project or you might have found this one piece of décor or equipment that you just had to have for that particular job, that’s going to happen but if you are losing money on a lot of a jobs, that is not sustainable and you will be filing for bankruptcy soon.