The Value of Job Costing in Managing Your Gross Profit Margin

Hi, Profit Designers! As we at Tap the Potential gear up for a number of special, upcoming projects, we’re taking this time to bring you some of our most popular episodes from the vault! We hope you enjoy it, and we’ll be back with new episodes for you very soon!

Diane Gilson joins Dr. Sabrina and Mike Bruno on today’s episode to discuss the value of using job costing to manage your gross profit margin, which translates into more money that you keep.

Although this conversation centers around job costing in the construction industry, there are valuable nuggets of information for those listening who may be in other industries, such as how to be a more effective business owner. Listen in for an inside look at how to design a business that supports the lifestyle you desire.

If you are a regular listener of the Profit By Design podcast, you’ll know that it’s not about how much money you make, it’s about how much money you keep!

Diane Gilson created Info Plus(+) Accounting® In 1994 to help business owners establish job-cost accounting systems so they can access critical day-to-day operations data using QuickBooks as their primary management accounting tool.

Diane’s passion is designing, customizing, and upgrading accounting systems and financial controls for small to mid-sized construction and manufacturing companies.

Her online workshops offer job-cost and management accounting training using QuickBooks and Intuit Enterprise Solutions—as well as in-house products—to teach, trouble-shoot, and coach clients and other accounting professionals throughout the United States.

As a published author, speaker, and professional QuickBooks trainer with over 30 years of accounting experience, she is viewed as a leader in her fields of expertise.

Profit by Design is a Tap the Potential Production in collaboration with Small Business Consulting Group.

Show Highlights:

  • Diane addresses the impact on business owners who are not aware of their margins.
  • Diane details five ways that job costing dramatically increases your profitability:
    1. Locate costs that you haven’t billed out.
    2. Spot and eliminate your low-profit and loser jobs.
    3. Change your business niche.
    4. Review estimate versus actual reports.
    5. Use a 3-step combination method to increase your prices:
      1. Decrease your costs of goods sold or production costs by 5%.
      2. Increase your prices by 5%.
      3. This increases your gross profit margin of 10%. Gradually increase volume.
  • Once business owners start seeing numbers that make sense and are set up in a logical format, it can change their lives.
  • Investing 20-40 hours is all it takes to learn the job costing system. This could mean an extra $100,000 a year.
  • If you’re in an industry where job costing is not part of the conversation, Dr. Sabrina encourages you to be curious about what it might look like in your business, how it would empower you to have that information at your fingertips, and what different decisions would you be able to make with that information.
  • Diane covers the hidden costs of hiring people for your team and how that eats away at the gross profit margin.
  • Dr. Sabrina shares the 80/20 principle, which is where 20 percent of clients are responsible for 80 percent of your revenue. Clients with Tap the Potential’s Better Business, Better Life™ programs learn this principle and how to zero in on the best clients to work with. In this way, you do not need as many team members, and those team members you do have tend to be A-players, who are able to focus on how best to serve your clients.
  • Don’t count on somebody else to learn this job costing process for you. The business owner should be responsible for learning the process and then can later decide if this should be assigned to another team member.

 

Links and Resources:

Download Your Free Workbook: How to Make Your Time Worth $10,000 an Hour

Register your A-Player team members for Tap the Potential’s Leadership Bootcamp

Sign up for the Better Business, Better Life™ Summit!

About The Author

Dr. Sabrina Starling, The Business Psychologist and international best-selling author of the How to Hire the Best series and The 4 Week Vacation™, is the founder of Tap the Potential and host of the Profit by Design podcast. At Tap the Potential, we work to free business owners from the constant demands of a growing business.

We believe work supports life, not the other way around. Clients in our Better Business, Better Life coaching program have more time for what matters most and more money in their bank account than they’ve ever had. Next, we send them off on a 4 Week Vacation™ to celebrate their hard-earned journey to take their life back!

Dr. Sabrina and her team at Tap the Potential are on a mission to change the story of entrepreneurship from one of long hours, grinding it out, to one of sustainably profitable businesses that support and enhance life. The Tap the Potential Solution™ and our Tap the Potential Family of Business Owners are disrupting small business as usual. We are on our way to making the Tap the Potential Solution™ the mainstream model for growing business.

By 2023, 150 Tap the Potential clients will have taken 4 Week Vacations. These are the trailblazers, role modeling what’s possible for entrepreneurs. In many entrepreneurial circles, it is becoming more and more common for one entrepreneur to ask another, “Have you taken a 4 Week Vacation™?” (as opposed to asking “How many employees do you have?” or “What is your annual revenue?”). Taking a fully unplugged 4 Week Vacation is rapidly becoming the recognized symbol of entrepreneurial success.

Never one to accept the status quo or back down from a challenge, Dr. Sabrina’s How to Hire the Best series grew from her desire to solve the toughest hiring challenges interfering with her clients’ growth and profitability. What sprang from her experience working with entrepreneurs in rural areas catapulted her into becoming the world’s leading expert in attracting top talent in small businesses—no matter what hiring challenges those businesses are facing—and earned Tap the Potential’s reputation as the go-to resource for entrepreneurs committed to creating Great Places to Work with thriving coaching cultures and highly engaged team members working from strengths.

As The Business Psychologist, and with her years of driving profit in small businesses, Dr. Sabrina knows what it takes to find, keep, and motivate exceptional performance out of your biggest investment—team members.