If the answer is no, keep reading, because by the end of this blog, you will 100% want to know what jobs are profitable in your business and which jobs aren't, so here are 4 Reasons You Need to Know your Job Profitability:
1. Reduce the amount of work that doesn't make you money!
We all have work that we do that we are not too sure is actually making us money or not. Right?
Knowledge is key! Knowing what work does or doesn't make you money by testing and measuring what you have quoted VS what you realistically make in profit, you can start making better choices about the jobs you take on
2. Target the RIGHT work with the RIGHT marking
Let's say you are a carpenter. You do some rental maintenance work, and you also do bathrooms. You decide to measure your profitability on both and discover that the rental work only brings in 10% profit, and the bathroom work brings in 25% profit. It is a NO BRAINER that you need to INCREASE the amount of work you do on bathrooms, and therefore, you need to increase the amount of MARKETING you do to increase the work you do. Easier to get your marketing message right too. It is no longer 'I do carpentry jobs' - it is now 'I do bathroom renos' - boom! MORE MONEY MAAAAATE!
3. Hire and fire accordingly
By knowing your job profitability, you can also see which jobs you are making or losing money on and which staff or skill sets make or lose you money. Therefore, you can recruit the right people with the right skills to get the right OUTCOMES on a job. Again, the more efficient your team is (because they have the right skills), the better the profit on each job they do.
4. Report to your team on the performance of the business
Knowing the percentage of profit on jobs assists you to communicate with the team on how the business is performing. We don't talk dollars and cents to them because we are usually uncomfortable doing that. We can, however, communicate in percentages. For example, if you tell the team, "we aim for a 25%profit per job, but on this job guys, we only made 15%", it is easy for them to see where they might have gone wrong and helps them understand the challenges of your business better - and therefore inspires them to support you more. Because after all, the less money you make, the less money they may be paid into the future!
If you don't know how to measure job profitability, you best be jumping on our Amp It Up program. Job Profitability is just one of the areas we work on to help you and your business grow. Want to know more? Click here for all the details.
You might also like our podcast Tradie Business Money & Numbers.