Profit Margin

When you write your estimates, the goal is to make money.  Your profit margin should be reasonable.  It should cover the cost of doing business and making enough money to pay the bills and re-invest into the business.  Expenses such as business insurance, employee benefits, SBA loans, marketing fees, and cost of goods sold should all be considered when calculating your margins. 

Things that can affect your margin are poorly written estimates.  Going over on time and driving up labor cost will immediately impact your profit margin. Somethings just can’t be eliminated.  The cost of doing business is simply a factor of doing business.  The best way to improve you margin is growth.  If you can grow your business then you can hire more staff.  Hiring more billable staff members means you can offer a lower job rate.  This will ultimately lead to more bids being won and more money being made through volume.

Employees need to do a good job the first time around.  Call backs can adversely impact your profit margin. You should keep track of all of your jobs.  Keep track of the estimated hours versus the hours worked.  This will help you determine your profitability.  It will help you identify trends.  It will also allow you to determine which employees are performing well and which aren’t.