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Part 2 of Building A Successful Budget: Reading into your numbers and how to increase your profit!

| Topic:

Business Advice

by: Captain America

Introducing a new series of blog posts from the Super Heroes on the LMN Support Team.

You’ve just finished inputting all of your numbers in your LMN Budget and you’ve got some concerns. Don’t worry! It’s not uncommon for us to get all sorts of budget questions. Today we will be going over the most common question that we get here at LMN relating to the budget.

“Help! My profit is too low…”

On average we suggest a profit margin of around 10%. If all of your expenses are accounted for then this is a healthy number to strive for. So when you finish your budget and yours comes out lower than expected you may be alarmed at first.

What does this mean?

Low profit could mean a number of things including:

  • Not charging enough for your work
  • Overhead costs are high
  • Too much labor or equipment
  • Not doing enough work
  • Typo in the data you’ve entered

The first step you want to take is to go over your budget and make sure there were no typos in the data entry. Look for unusually high or low percentages in your budget as this could be an indication you made a typo somewhere.

The next thing you can try is to charge more for your work. To do this you would simply increase your sales forecast in your budget. You don’t have to adjust any other numbers because all you are doing is charging more. The important part here is to still be realistic.

Do more work…

If you think you can do more work and are adjusting your sales higher to reflect that, you will also need to increase your materials and possibly labor/equipment to align with this increase in work. The benefit of this is your overhead would stay the same so your profit will still increase. Using a software system like LMN will help you get more efficient so make sure you take this into consideration!

Look at your expenses!

Lastly, you may need to take a close look at your costs and see where you can cut some. This may be a last resort but it’s always good to look at your costs and see where you can save money. Maybe you can get better deals by buying supplies in bulk, find new supplier that has better deals, etc.

Another thing to look at here is your equipment. Are you spending too much in repairs and losing out to opportunity costs from the downtime? If you’re using that equipment often, leasing could make more sense to help avoid lost revenue from downtime.

Need help setting up your budget? Contact Captain America at support@golmn.com or call 1-888-347-9864.

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