Protect your profit margin with project management tools that allow you to identify issues in real time — before delivering a project at a loss. By FINSYNC Understanding profit margin is critical to managing any project, especially when you have offered to deliver it for a fixed fee. Unless you’re a charity, you need to know how to track and measure time allocation and out-of-pocket expenses. Anyone who has ever had to quote a flat fee for a project knows that capturing those metrics in a timely manner is a challenge. Regardless of the size or scope of your business, the right tools can help you track your margin in real time — which gives you the opportunity to make adjustments that prevent you from losing money on a project. What is Gross Profit Margin? Gross profit margin is the percentage of every dollar earned left over after subtracting cost. Let’s say that your firm charges $100,000 for a website build, and it costs you $60,000 to deliver. Your profit is $40,000. $40,000 in profit is equal to 40% of every dollar earned, or $40,000 divided by $100,000. In this example, your firm kept $0.40 of every dollar you made. A firm can increase the size of its margin in two ways: increase price or decrease costs. Your margin is just a percentage. Calculating your profit margin isn’t necessarily difficult, but tracking all the various metrics that you need to fill in the above equation can be a challenge in real-time. You don’t want to find out that you spent $120,000 of your own money to build your client a website that you delivered to your client for $100,000. Yikes! Determine What it Costs to Generate Revenue Before you can track margin on a project you need to understand the cost of generating revenue. To do that you need data, including time allocation, out-of-pocket expenses, cost of labor and materials, etc. Once you fill in the blanks of the profit margin equation with this data, you can determine how much to charge your client for a delivered project. Fortunately, all of the data you need is readily available. Payroll Tracking and Project Management Software One way to keep profit-eating project expenses in line is to manage labor costs. A business may start a project with a budget, but often their sense of how on-budget they are is skewed before they’ve even processed payroll. Payroll is predictable enough when it comes to a salaried workforce, but understanding how much of your salaried team’s time was allocated to a project can be difficult. Allocating a freelancer’s hours to a particular project can cause a real blind spot without the right tools. The answer to these problems is time-tracking and project management software that allows your team (both employees and contractors) to track time in real-time and convert the hours logged into labor cost on a project immediately. De-Centralized Sources of Data The software needed to track profit margin is seldom centralized. It’s often scattered in different places across your network in disconnected systems. When your profit margin data (time sheets, labor costs, etc.) isn’t centralized, you often have to pay someone to collect that data, crunch the numbers and determine your profit margin. If that type of analysis is performed at all, it’s typically an exercise that involves gathering data from multiple sources and compiling it in Excel. This type of work is costly because of the hours required, and also because it can’t be done until the project is over. A single source of data, on the other hand, not only makes it simple to track margin on a project, but also gives you the ability to determine whether a specific project phase is profitable and determine if the overall project is still tracking towards a profitable conclusion. If the project starts off on a bad foot, you still have time to correct course. FINSYNC’s All-In-One Platform Many popular accounting platforms don’t track time or offer project cost accounting. Look for an intuitive project management tool like FINSYNC that can collect, track and evaluate all of that valuable data. FINSYNC’s cash flow, accounting and payroll software is an all-in-one solution that can replace applications like QuickBooks and other disconnected apps used to run a business. With FINSYNC you can check up on a project’s health in real-time, with an understanding of what your current margin is and how much of your budget you’ve already spent. The software also collects historical data, which is tremendously useful for future projects. Have you been asked to build another website? Have a look at the last website project you did, clone it, and make adjustments as needed. With all that valuable data stored in FINSYNC, all you have to do is run a report and you’ve got all the information you need to track margin on a project — and make better decisions as a business. Whether you build websites, apps or houses, you need an intuitive solution that allows your business to track time and expenses, and understand at any point in time how profitable your project will be. FINSYNC is that all-in-one solution, and it’s just a click away.
Overwhelmed by your “to-do” list? Learn four smart strategies for prioritizing tasks so you can get more done with less effort. By FINSYNC Ever wish there were about five more hours in the workday? We know the feeling. As a small business owner, learning to manage your time effectively can help you minimize your efforts and maximize your results. As author Tony Morgan said, “You get to decide where your time goes. You can either spend it moving forward, or you can spend it putting out fires. You decide. And if you don’t decide, others will decide for you.” Ready to tackle that endless “to-do” list? Learning to prioritize tasks is the first step to effective time management. Using a proven strategy to help you prioritize will allow you to make the most of your time — and knock out that list once and for all. In the training course Time Management for a Small Business, the SBA introduces four different ways to tackle prioritization: the Pareto Principal, the ABC System, the Eisenhower Method and the POSEC Method. Trust us, these “methods” sound more daunting than they actually are. Here, we give you the basics of each approach so you can choose the strategy that works best for you and your business. 80/20 Rule Most of us know the Pareto Principal as the 80/20 rule. The idea behind this rule is that 20 percent of your time and effort will produce 80 percent of your results. Just as 80 percent of your customers likely represent 20 percent of your revenue. Say your goal is $100,000 in sales. Around 20 percent of the time and effort you spend to achieve this goal will likely result in $80,000 in sales. The remaining 80 percent of your time? That’ll only get you the final $20,000 to reach your goal. So how can this idea of unequal distribution help you manage your time more effectively? Your job is to identify the tasks that produce the best results. Then bump those tasks to the top of your to-do list and tackle them first to get the most bang for your limited-time buck. ABC System As a small business owner who juggles a variety of responsibilities, you need to make sure that the most important tasks get done first. The ABC method is a simple way to prioritize your to-do list in order to accomplish just that. Go down your to-do list and label each task A, B or C. “A” rankings are reserved for your most urgent tasks, “Bs” are slightly less pressing and “Cs” are your least important to-dos. Once every task has a letter, prioritize subtasks for each major item with numbers (1, 2, 3 …). You’ll complete task A-1 first, followed by A-2 and so on until you get to the Bs. This straightforward method helps you get organized quickly and leaves you with a road map that can make an overwhelming to-do list look much more manageable. As every small business owner knows all too well, things can change quickly, so you may need to re-prioritize in order to adjust to outside factors. Eisenhower Method It you prefer a time management method that’s slightly less precise than an ordered list, the Eisenhower Method may be for you. This strategy helps you distinguish between urgent and important tasks. As Dwight D. Eisenhower famously said: “I have two kinds of problems: the urgent and the important. The urgent are not important, and the important are never urgent.” Once again, you’ll want to start with your list of tasks. This time, group all of your tasks and activities into four categories:
- Urgent and important
- Important but not urgent
- Urgent but not important
- Neither urgent nor important