Knowing your project margins isn’t just about keeping your projects profitable, it’s a cornerstone of your whole-of-business strategy, and underpins every aspect of what you do.
Here are the top three reasons to understand your project margins
Budgets are only as accurate as their inputs, and most budgets for complex businesses assume a set margin on projects to allow for your overheads, tax, and profit. If your forecast margin for your budget doesn’t match the actual project margins you’re achieving, you’ll find yourself in trouble. Worse than that, tt can be hard to see why, without trawling through the year’s worth of data.
If you, like most business owners, want to scale and grow your business, you’re going to need to know every little detail that you can to help you make informed decisions. Whether those decisions are about capital investment on a new piece of equipment or hiring an extra tradesman to get you OFF the tools and to spend more time on the business. Even if it’s just a cashflow based decisions to avoid running into temporary trouble that can undermine your business’ reputation, your costs and margins are the key indicator of whether you can, and should actively seek to grow.
Reward and Promote Great Staff
Simply by having a good understanding of forecasts and actual margins, you are able to identify which staff are quoting accurately, or getting all of their projects done under budget. When you’re tracking your forecast vs actuals, it’s easy to see whether low margins are caused by problems with time overruns, supplier price increases, or just inaccurate forecasting and gives you the power to train, or reward your staff appropriately.
WorkGuru can help you understand your project margins
Predicting the financial future of your business is not easy, especially if you’re starting a business and don’t have a trading history. However, once you have ways to measure your margins in place, you’ll be able to see the profits and losses of your projects and have a great starting point to work from.
Frequently reviewing your forecasts and adjustments will ultimately allow you to become more accurate with future predictions as well as details of actual progress and results, and ultimately make your business better.
WorkGuru can help by providing forecast and actual margins at almost every step of building out your projects, from quoting to the final invoice. With real-time reporting, you can keep your finger on the pulse of your business’ margins.