ProfitÿDrain #1 In-House Bookkeeper
This Article Will Focus on increase profits and to help plumbing contractors to identify and stop profit leaks. It is the little leaks that sink the big ship?not the big holes?they are easy to see and fix!
Until Your Plumbing Company ? Reaches at least $5 million in annual sales you cannotÿafford to hire a qualifiedÿbookkeeper orÿconstruction accountant full-time to put on your accounting staff. And there is no such thing as a part-time qualifiedÿbookkeeper orÿconstruction accountant.
weekÿthinking you willÿsave money. The problem with that is you may not understandÿthe trueÿcost to have them on your payroll, including overhead, is closer toÿ$25.29 per hour.ÿThis is known as the ?Fully Burdened Labor Rate?.
You Can Find Several Ways ? To calculate Fully Burdened Labor Rate on the internet and in a number of business textbooks. We have an Excel document with complex formulas that we built from researching historical records of past and present Plumbing Contractor clients including our own Plumbing Contractor Companies. If you want a simple ?Rule of Thumb? the amount you pay an office worker by and multiply it by ?2? to get a rough idea.
For Example ? If you have an in-house bookkeeper A.K.A. ?Profit Prevention Tool? (we have interviewed a lot of in-house bookkeepers and most have one thing in common; the belief they are entitled to be paid at least 80% of whatever the Plumbing Contractor earns since in their Paradigm they are doing most of the work and that is a subject for another day) costing you $25.29 per hour then?
HighlyÿProfitable ? Plumbing Contractors know have operations manual with standards of conduct for office staff and they have methods of monitoring productivity with ?Project Management? and ?Work Flow Management? software and other tools such as regular updates of Personality Profile assessments using Meyers Briggs or some other tools. What gets measured gets managed.
It willÿsave ten minutes a day in labor
It will last 3 years
The standardÿresponse from most Plumbing Contractor?s ?The companyÿcan?t affordÿit!?
Cheap Tools And Equipment ? Cost Plumbing Contractors a lot more money than they know because they cannot see it. Out-of-sight means out-of-mind. When Plumbing Contractors invest in the best tools and equipment they can afford in most cases the overall bottom line profit increases dramatically because construction workersÿwho take pride in their work produceÿbetter resultsÿfaster with fewerÿrepairs if they have quality tools and equipment.
Mistakes are made by under trained bookkeeper.
For Example ?ÿYou hireÿa qualified Journeyman Plumber for $25.00 an hour the Fully Burdened Labor Costs will be roughly $35.64.
For Example ? Your best construction worker asks for aÿtool:
In This Example ? It may make sense toÿfinance the purchase even if it means using a credit card at 12% interest because the net return is $3,289.36 which is 245% ROI. See below:
ProfitÿDrain #2 Cheap Tools And Equipment
Annual Savingsÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ$1,544.42
Credit Card Interest 12%ÿÿÿ $ÿÿ ÿÿ(144.00)ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ