Yes! It is Friday!! Time for our Fan Friday episode where we cover a listener or client question. Today we touch on two very important topics that make huge differences in your bottom line. 1. How do you calculate the value of your time? 2. Where do you spend your time to make sure you are maximizing your revenue and profit? Check out the website for more content www.bcbousa.com
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We made it to the end of another jam packed week! Pat yourselves on the back for a job well done! As we like to do on Friday, we are going to cover a couple of questions, but Dan cheated this week. The topics came from clients with prospective clients this week instead of listeners, but the topics are so important he could not resist sharing.
The first question was in regards to the need to do bookkeeping at all. Why bother? Just keep handing over the bank statements at the end of the year to the accountant and hope for the best. While you can survive and scrape by using that method, not having proper bookkeeping or understanding of your company finances is a path to failure in the long run, not success. Without the proper information it is impossible to know whether you are making or losing money, make informed decisions for the future, or properly value your time and company.
The next question ties into the importance of bookkeeping, and it was how to calculate the value of your time. How do you associate a dollar amount to your time? For those in the services or construction industry it is likely something you already know. You bill X amount of dollars per hour when you work on a job. What if you don’t operate in that way? How do you figure it out? It’s not as hard as you may think. In a nutshell, calculate your salary, add overhead, and then add profit. The key is having that information available to you so you know what your overhead is, etc.
Once you have the information and calculate the value, the key is making sure you are using it properly to maximize your revenue and profit. As discussed in the past, if you are a mason or plumber or carpenter and you can bill your time at upwards of $100 per hour, is spending 8-10 hours a week in the office doing bookkeeping the best use of your time? Most likely it is not. You can outsource that service for a fraction of the cost and spend more time in the field generating income and profit.