For me, the biggest challenge is keeping overhead from growing faster than revenue. It’s easy to look at a job and think you made good money because the gross margin looks strong, but once labor, fuel, insurance, equipment, software, and all the other expenses hit, the actual net can look very different. I’m focusing more on tracking the numbers job by job and making sure growth is actually creating profit, not just more revenue.
There is a way of ensuring that overhead doesn’t outgrow revenue. I use a KPI with my clients called CORE (cost of overhead relative to execution). This ensures that overhead is captured properly in pricing. This KPI has to be monitored at least quarterly and it can be used to help you forecast as well.
That’s a really interesting way to look at it. I like the idea of tracking overhead against actual production instead of waiting until the end of the quarter to see if profits took a hit. Having a KPI that helps you price jobs correctly and forecast ahead could make a huge difference as a service business starts to scale.
Are you looking to see how it works?
Yes im interested to know more
