For a company to succeed it is imperative that you know your break-even point. Chasing turnover without regular job costing and Income Statements (Profit and Loss) means you are running blind. You need to take the time to know and understand your cost structure. Know your fixed costs (rent, wages, power, telephone accounts and insurance) as opposed to your variable costs. Understand the gross margin you need to achieve to be profitable. Are you pricing for profit or for survival? Are you recovering your true costs of materials and variable (marginal) costs or simply quoting your marginal costs.
Click on this link on the Queensland Government site and read the excellent article on calculating your break- even point. They even have an interactive calculator to assist you in working out your gross profit margin taking you through the formula and working out your break-even point.
http://www.business.qld.gov.au/business/running/making-and-managing-money/calculating-your-break-even-point
A certified professional bookkeeper will ensure your Chart of Accounts is structured so that fixed and variable costs are identified. This will mean you will be able to identify your break-even point and the margin you need to achieve profitability. You will be able to monitor margins and be alerted to over runs with a monthly Income Statement (Profit and Loss) reports highlighting deviations from the budget so you can evaluate the necessary remedial action ahead of time.
Ring Jaleana from Bookkeeping Fairy Perth on 0400 102 358 for all your bookkeeping requirements. Website www.bookkeepingfairyperth.com.au
I am a Registered BAS Agent 24806584, a Certified Partner with Xero, a Certified Bookkeeper and Associate In Practice Membership with the Institute of Certified Bookkeepers, hold a Cert IV in Financial Services, have Personal Indemnity Insurance and a National Police Clearance for your protection. I have over 15 years experience in MYOB and a current experience in Xero. My work is guaranteed, so let me free you up to do what you do best, running your business.
