Work Tracking Software

As a business grows it can be very easy to lose sight of how much it costs to deliver a service or make a product and sell it.  If you’re not careful you could end up making a loss each time you make a sale.  Here’s how to avoid that happening to you.

Timesheets
Work tracking software is vital to understanding how much work is required to deliver the service or manufacture the product.  However, they’re difficult to introduce (workers immediately feel threatened by them) so if you’re just starting a business put them in place right from the start and save yourself a lot of grief.

Overheads
Notoriously difficult to tie down and control, overhead is all the things that are additional to product manufacture/service delivery but vital to the company as a whole.  Things like rent, services, IT support contracts, legal fees, and tracker application – they all add up and need to be taken into account.  Review your overhead regularly and then spread it over the year to make the figure more real and manageable.

Budget
You need to have a detailed annual budget and, just as important, you need to look at it regularly.  Don’t be afraid of making the budget visible to the team; this will allow them to get a better understanding of how their actions make a difference to the overall profitability of the business.

Purchasing
Make one person responsible for signing off all purchases.  This really helps to control spending and ensures that only what is needed is actually bought.  When people have to explain why they want something they start to only ask for the things they really need.

Mark up
Once you know all your costs you then need to make sure you add a mark up because this is your profit.  Industry mark up levels vary widely but with a small business you should be aiming at around 10-15% net profit.  To achieve this your gross mark up may be as high as 35% (to cover costing inaccuracies, bad debt, taxes etc).

Build a dashboard
Imagine if your vehicle didn’t have a dashboard; every time you wanted to check the oil, water or gas you’d have to stop, get out, look under the hood and then carry on.  Alternatively you would spend the whole journey worrying about something going wrong.  A dashboard helps you to see – in an instant – how things are with the vehicle and you should have something similar for your business.  Every business is different so use the criteria that are useful to you and review every day at your daily meeting.  As a starting point measure the things highlighted above then add things like sales and cash levels.