Whether you are running a service-based business, or a product-based business, or a hybrid of the two; being able to produce accurate detailed costings is considered one of the toughest aspects of any business function to get right.
Yet if you intend your business to make a healthy profit, producing accurate costings will be fundamental to your success.
One of the main reasons businesses fail to meet their profitability targets is that their costings are incomplete (or just plain wrong).
Many small-medium-sized businesses find themselves running at a loss because they have not taken into account all the variables associated with their products or services before calculating their selling price.
If you are a manufacturer you will know that the margins between making a loss and making a profit can be slender indeed. And that the prospect of dealing with tough negotiators in the marketplace can make those margins narrower still.
That is why it is crucial to have accurate facts and figures at your fingertips before presenting to a potential client. It is therefore imperative that the bookkeeping services you use are 100% reliable and accurate, whether based in-house or remotely.
Including all the variables in your sales equations is the only way to ensure your venture’s long-term success and profitability, because it means that you will be able to avoid deals which could potentially harm your business. In fact, you won’t even need to consider them.
For example, what would you do if an established customer phoned you up and asked you to make an unscheduled delivery of four boxes of red widgets tomorrow morning? Now normally you would specify a minimum order of two pallets as this is the most cost-effective option for you, however you could have these delivered to your customer by courier for £120.
On impulse, most business owners would say yes. What about you? Is it worth doing to keep the customer happy would you say?
Knowing the precise figures involved in production and distribution of your products will help you make informed decisions and avoid costly mistakes. Even assuming your business can swallow the occasional loss, might you be setting a dangerous precedent for future transactions with this customer?
Professional bookkeeping services could help your business gain a competitive advantage in an unforgiving marketplace. As always where financial margins are concerned, exact knowledge will empower you to put the needs of your business first, and in doing so you will maintain honest ongoing relationships with customers and suppliers, as well as preserving your fair reputation.
No comments:
Post a Comment