How to get more control over your profits

Making a profit on a business project is a constant balancing act. If you don’t get certain things right, there’s a huge potential to lose money. 

Some of the things you need to consider are that:

• You have the right mix of people
• Your team doesn’t over (or under) deliver
• You’ve priced the job well

That means your people costs play a huge part in how profitable your business is.

So what do you really do all day?

When I asked my team to start tracking their time (and started to track my own time too), what we discovered gave us so much more control over our profitability.  Time tracking isn’t about spying or trying to catch people out. The simple fact is, if you don’t know exactly how your team is spending their time, you’ll always be stuck on the treadmill of busy work. 

Here are 5 of the most common and costly leaks that time tracking has uncovered for us:

1. Scope creep: If a client is regularly adding in extra services or your labour costs have increased, and you’re not adjusting your price to accommodate this, you’ve got scope creep, and it’s costing you money. Simply identifying where it’s happening and putting a system in place to manage it will not only improve your bottom line but also ensure that you don’t go over the budget.
2. Under-estimating how much a job or selling a product will cost to deliver: It’s easy to underestimate the true cost of selling a product or running a job, particularly if you don’t have any data to base it on. When you underprice yourself regularly, your profit margins will be lower than you expect, and you’re going to start running out of cash. Once again, tracking your team and your time, because when you understand what a job or product involves and who is doing the work, you’ll finally know the true cost and can charge for it.
3. Inefficient processes: When you start tracking your team’s time, you see which parts of a job or process are most time-consuming. Then, you can work out how to make the process more efficient. Often, it can be as simple as moving from manual systems to automated ones, and with the wealth of tech available, it can be very simple to implement.
4. Too much time: There are only so many hours in the day, and no matter how efficient your business is, you’ll want to make sure that you’re using those hours wisely. This means working on those activities that are the most profitable for your business. Setting a realistic target of how many hours your team is expected to be doing on the job helps them manage their workload in a more time-efficient and profitable way.
5. One job or product is less profitable than another: If one of your products or jobs is more profitable than the other, digging deeper to understand why can help you improve efficiencies in the other jobs. Time tracking is a great way to work out a best practice that can raise the bar across your whole business. It will also highlight if there is spare capacity or not enough, so you can plan ahead and redistribute your team accordingly.

Plugging the leaks in your business is just one of the many tools we use to help grow more successful.