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3. Failing to manage customer new employees, vehicles or advertising You can use your accounting software to
relationships and marketing that are not producing a calculate your profit margins, track your
corresponding increase in revenue.
expenses and monitor asset turnover,
It’s a fact of life that some customers require among other key performance indicators.
more time and attention than others. And Furthermore, to control overheads, we
that means they are more expensive for recommend setting budgets for your Manufacturers can use software to
your business. For example, they may be overhead expenses and then sticking to monitor how much downtime they are
late in delivering a document you need to them. The amount budgeted for each line experiencing for factory line changeovers
get started on a job. item should be based on analysis rather and equipment repairs.
Or they may ask for changes or add-ons that than simply using last year’s numbers. Similarly, timesheet tracking software
A business case should be made for any
weren’t included in the contract you signed. substantial increase. allows you to monitor worker productivity
Too often, companies go along with doing and generate data for invoicing.
extra work without charging for it. On one To cut expenses, use the 80/20 rule when Once you’ve identified margin killers,
construction project, we found the company deciding which ones to attack first. Look you can work to continuously improve by
had provided free work on customer at the outlays that represent 80% of your using a dashboard and KPIs to monitor
changes that equated to 10% of its total total expenses and work on reducing progress towards your goals.
revenues earned on the project. those. That’s where you will get the most
The key to dealing these kind of margin bang for your efforts. Keep a constant watch on your
killers is to plan ahead and be vigilant. It’s also a good practice to go to the margins
Stipulate in your contracts how changes and market periodically to see if you can Maintaining healthy profit margins is
add-ons will be invoiced. Make sure your get a better deal on fixed costs, such as essential for ensuring your business is
team always tells you about unanticipated insurance, telecommunications services, earning the money you need to reinvest to
requests before the work is done and then and maintenance contracts. stay productive, competitive, and growing.
inform the customer what it will cost.
5. Failing to use technology That’s how the very best businesses get
4. Allowing direct and overhead Technology-based solutions are stronger with every passing year.
costs to grow uncontrolled invaluable in the fight to eliminate profit
Growing revenues can often lead to a killers. They will help you find where profit
lack of rigour on expense control. A close is leaking and optimize your operations,
look at where your dollars are going may customer relations and pricing.
reveal rising costs for such things as

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