Do You Know Which Customers or Jobs Actually Make You Money?
Your biggest customer isn't necessarily your best customer.
And your busiest type of work isn't necessarily your most profitable.
It's surprisingly easy for a business to have plenty of work coming through the door while some of that work is actually making very little money.
Revenue Doesn't Tell the Whole Story
Imagine two jobs that are both invoiced at $10,000.
Job A runs smoothly, uses the expected materials and is completed within the estimated labour hours.
Job B requires extra labour, more materials, several phone calls, a return visit and some rework that isn't charged to the customer.
Same revenue.
Very different result.
That's why understanding profitability at a customer, job, service or product level can be so valuable.
Watch the Hidden Costs
Sometimes the least profitable customers aren't obvious.
Consider the customer who:
regularly wants urgent work
requires a lot of administration
negotiates every price
pays slowly
changes the scope halfway through a job
needs repeated follow-up
regularly requires work to be redone.
They're still generating revenue.
But how much are they actually contributing to your bottom line?
Back-Cost Your Jobs
If you quote work, one of the most useful things you can do is compare what you thought the job would cost with what it actually cost.
Look at:
materials
labour hours
subcontractors
freight
wastage
rework
other direct costs.
Then compare the actual margin against the margin you priced.
Patterns soon start appearing.
Perhaps one type of work consistently takes longer than expected. Maybe a particular product isn't priced high enough. Or perhaps some of your smaller jobs are actually far more profitable than your larger ones.
Use the Information
The point isn't to produce another report.
It's to make better decisions.
You might change your pricing, tighten your quoting process, stop offering an unprofitable service or focus your sales effort on the work that produces the best return.
Sometimes growing a business isn't about finding more customers.
It's about finding more of the right customers.
At Cross Group, we can help you understand where your business is really making its money — and where it isn't.
Let's turn your numbers into information you can actually use.