In today’s interview, you will learn how to maximize the profit on that big backlog of work we all have on the books. As we take on more work, most contractors experience “slippage” in their profit margins and lose control over what started out as a profitable job but have now turned into a loser that we’re just trying to close out. You're making the same amount of profit you were before, but now with lower margins, more risk, more stress, and more headaches. Only with good Job Costing are you able to know the “true” cost of your jobs, which type of work is the most profitable, and how to squeeze out every additional dollar down to the bottom line.

My guest, Leslie Shiner, has an MBA in Finance and Accounting from UC Berkeley and has been a financial and business consultant to the construction industry for over 30 years. She only works with contractors and knows her stuff when it comes to maximizing job profits.

What you’ll hear in this episode:

• What Job Costing means for you
  1. How much did I spend?
  2. How much did I think I was going to spend?
  3. Am I going to be on a budget or over budget?
  
  
• Why you should want to work like you do now but make 2x the profit
• “Revenue is for vanity, profit is for sanity, and cash flow is for reality.”
• Basics of job costing:
  1. Identify areas of slippage
  2. Evaluate areas of cost during the job
  
  
• Use Leslie’s calculator to find your true labor cost
• How to track labor efficiency into your job cost
• How to find your labor utilization rate
• The “extras”: liability insurance, payroll taxes, workers’ compensation, vehicle costs, health insurance, cell phones, and small tools
• Above the line and below the line costs
• The most important part of job costing: compare apples to apples
• The biggest mistake: creating a budget at the billable rate but job costing at the gross wage
• Dollar variance vs. hours variance
• How to review your estimated cost vs. actual cost
• Strategies for making employees as productive as possible
• Focus on the work you do well
• Manage your work by knowing your numbers
• Three ways to improve profitability:
  1. Spend less
  2. Charge more
  3. Do more work
  
  
• Cost reports that we need and KPI’s (key performance indicators) to keep track of
• How to improve job costing efforts in your company

Resources:

Shiner GroupA Simple Guide To Turning A Profit as a Contractor Free Business Templates: Shiner Group

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