Are You Actually Profitable — or Just Busy?
This been on my mind for a while now, A business can have plenty of customers and still not be making enough money. What numbers do you track to know whether you're truly growing?
Forum Discussion
4 Replies
How do you know where numbers need to be? It’s all new to me how do you learn to measure it . Right now I’m at 70% gpm but have little over head and more revenue in but this doesn’t feel like it will stay the more i build up .
I'm assuming 70% GPM since you are on the tools?
I would make yourself a budget at the start of the year and see how you feel about it. Put in the revenue you think you will do, get yourself off the tools 100% so your gross margin will come down. You will be a fixed expense. See how it all washes out. What does your net profit look like at the end? You can move things around if you like.
A business coach could help you with this as well. Ideally you'll see 10-20% net profit, 3% spent on marketing, 15% on management, 50% gross margin. Something along these lines but numbers that you like.The new Jobber bookkeeping features will be great for this going forward.
Good luck!
I'm a gross margin guy.... and then the other one we "try" to watch is fixed expenses.
As long as my gross margin is staying where it needs to be, which is about 50% for us. If I'm not spending too much money on the fixed expense side, I know business is running pretty smoothly.
I'm, of course, always staring at my revenue, but it's been pretty stuck in the mud the last few years.
I think the biggest number is what is actually left after all the bills are paid. A business can stay busy all month and still have very little profit. I would rather have fewer profitable jobs than a packed schedule that barely covers expenses.
