Updated: Nov 28, 2019
You just finished another job. You’re turning out satisfied customers like Chick-Fil-A pumps out chicken sandwiches. Nice job! Now it’s time to get paid, or maybe not. As you start to pay for all of the expenses it took to produce your product or service you realize that you’re broke. You’re actually losing money. How’s this even possible? Step one: get curious!
I would recommend that you evaluate two things: why are customers chasing you down and are you charging enough for your products/services? If customers are coming to you because your pricing makes a 99-cent fast food menu look pricey then it might be time to consider raising your rates. Side note: Thank you to Taco Bell for feeding me all those years. Your tasty bean and cheese burritos with extra green sauce was appreciated. Anyway, when contractors first start out, they’re naturally more concerned with just getting a customer rather than making a profit. I get it. However, you should move away from this model as soon as possible as it’s not sustainable. If a customer wants you to pay them to do work, consider finding a different customer.
Secondly, consider what it costs to produce your product or service. Some costs are going to smack you in the face like a bad dinner date while other costs are more subtle similar to a cockroach with the lights on. Pay attention to these hidden costs. These are the expenses that will eat away at your paycheck. Cockroach expenses should be factored into your quotes. Some examples include business insurance, gas, vehicle maintenance, marketing, benefits, retirement savings, etc.
Once you have a good understanding of the problem, throw away your abacus and purchase an accounting system that can help track your expenses. There are several products on the market today that are worth every penny. QuickBooks has been out forever. Make the jump already. Geez! Next, establish a budget and track your expenses against that budget. If you’re not making money, then you need to raise your rates. Wouldn’t you rather make $500 with one customer than lose $50 with 10 customers?
In closing, if you need help with your small business, schedule your free consultation with Great Family Management Consulting today. Let’s take off together!