By Rene Artz
Builders – take a measure
What gets measured gets improved.
We know this is true in competitive sport, we just don’t see it as often in trades.
Do you measure the profit of each client build?
The All Blacks play to win and to do that they measure every game, from the line out to contact loads.
Like sport, you can improve results when you have a target to measure up against.
So what should you look to measure when profit is not as strong as it should be?
Start with each build
Measure the margin of every build.
If you do, it will tell you how much gross profit (or not) you made on each job.
It can also provide a breakdown of costs when weighing up your next quote for a similar build.
Understanding job margins and knowing when and where you need to re-price is key to consistently making money as a builder.
Leaving it until end of the year is too late to make a change.
Easily track project costs in Xero
At most, builders could end up with two or three client jobs on the go.
And unlike a sparky or plumber, builders can hammer away on a job for months at a time, so you don’t need complicated technology to manage the team.
However, you do need to track income and expenses to a client build as they come through.
You can do this quickly in Xero through a clever chart of accounts; this is accountant-speak for where you code income and expenses.
With a clever chart of accounts, you can track everything from site works, framing to fit out.
Then you simply track each income or expense to a client job through Xero tracking.
You can even use Xero connect to automatically get supplier invoices from Placemakers to Z energy fed straight into your Xero accounting software as a draft bill.
Xero connect removes time-consuming data entry of paper invoices.
Now you can check key supplier invoices directly in Xero, drop down a menu to code it, drop down a menu to assign a client, and simply hit approve.
Meaning projects get tracked and bills get paid quickly, and you get out of the office.
Think about the money
There are many great builders who track their client builds.
Yet if we are truthful, most of those builders do not track their job margin, most will gauge success simply by what is in their bank account.
Like the All Blacks, take a measure to learn from every engagement, because what gets measured gets improved.
Get in touch with Mathieson’s, we’re Xero trade accounting specialists, we’ll show you how.
Mathieson Chartered Accountants Ltd
“your tax and Xero connected business advisers”
ph: 03 307 6455