why did my profits shrink last year when i was busier than ever?

Why Did My Profits Shrink Last Year When I Was Busier Than

Ever?

Seeing a drop in profits is almost always caused by one of two things

1. An unbudgeted increase in overhead

2) Incorrect Pricing

Learn why your tax return and take home pay don’t match.

Underpricing occurs when you are unaware how much overhead cost you will incur to perform the work, especially as your business grows.

To learn more about this topic, click here.

You need to have a firm grasp on your overhead costs to have an accurate view of how to grow your business.

Overhead are your costs that are not directly related to doing the job:

• Office space• Marketing• Trucks• Utilities

One-man teams tend to have large profit margins.

That doesn’t mean this is the most effective thing to do.

As you add employees, your profit margin will change.

It’s a simple concept—you’re now paying someone else too!

If you gross $10 per job but your costs are:

• $2 per job for gasoline• $6 per job for employees• $1.50 per job for overhead

You are now making only $0.50 per job. This is only a 5% profit margin.

Not very good at all.

Most businesses can’t absorb all of the costs that have been created to run

this bigger business with their original pricing model.

Another look at why you aren’t making money in your business.

Bigger companies price higher.

They’ve got greater overhead needs to provide for their additional services.

You’ll never be able to fully project all future expenses.

Pricing “one step ahead” will allow you to absorb that overhead easier for a

better run company.

This will leave you more margin in profit to grow the company faster

and reinvest.

Older clients will stay profitable because you won’t be losing money on them due to

different profit margins.

More ways underpricing hurts your business.

As your business grows you’ll have to adjust pricing to maintain profitability.

If you don’t, you’ll slowly put yourself out of business as

you get bigger!

Service Autopilot helps you keep track of all costs to ensure you remain profitable in

your growing business!