Craig Rust Business Innovators by pptfiles

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									 What does your business
   really cost to run?


Craig Rust
Business Innovators
                      Material Copyright of Business Innovators
What will be covered
q Business Risks
q Sales v Profits
q Costing Labour
q Discounting
q Final philosophy




                       Material Copyright of Business Innovators
Business Risks



 q Lets name them?




                     Material Copyright of Business Innovators
Material Copyright of Business Innovators
Material Copyright of Business Innovators
Sales v Profit
What are you in the business of producing?


      Sales                        Profit




                                     Material Copyright of Business Innovators
Profit Drivers

q   Maximum Sales

q   Minimum Expenditure

q   “Why is it so hard to achieve?”




                                      Material Copyright of Business Innovators
Pricing methods

q Charging what the market will bear

q Cost plus pricing

q Charging what competitors charge

q Quoting above cost but below competitors prices

q Accepting what the market dictates



                                       Material Copyright of Business Innovators
Costing services

q Direct labour costs

q Apportioned overhead costs

q Both on an hourly basis  




                               Material Copyright of Business Innovators
Calculating charge out rates for time

 qProductive hours:


 q Total hours
 Less:           Holidays
                 Sick pay
                 Administration time
 qDivided by     Expected salary
 qPlus           Overheads
                                       Material Copyright of Business Innovators
Available Hours
 Total year:
 52 weeks x 40 hours per week =                          2,080

 Deduct:
  - Holidays:  4 weeks x 40 hours =                         160
 - Statutory Holidays:  11 days x 40 hours =                  88
 - Sickness: I week x 40 hours =                              40
 - Special Leave: 3 days per year =                           24

 Total hours to deduct =                                    312

 Balance available = 2080 – 312                          1,768
 q (Or 44.2 weeks at 40 hours per week).

                                                Material Copyright of Business Innovators
Chargeable Hours
Then take off non - chargeable activities:
- Staff Meetings - Tool Box Meetings – Planning –
   Training - Waiting for work - Cleaning the vans, 
   etc.
 Let’s assume a conservative estimate: 1 hour per 
   day or a further 220 hours per year and 25 hours 
   per year structured training.  
 
q 1,768 – 245 = 1,523 chargeable hours per year 
                                      Material Copyright of Business Innovators
So It’s All About Margins

q Discounting is the biggest killer of margins
q How much money are you really giving away
q Remember the Jeans!!!


q   What did that discount really cost you!!!!!




                                        Material Copyright of Business Innovators
Material Copyright of Business Innovators
Get all your ducks lined up

q   Working on your business not in it!




                                          Material Copyright of Business Innovators
A philosophy

q Do not worry
q Know when to yield
q Be the expert
q Lead
q Go out on a limb…
q Remember the turtle…




                         Material Copyright of Business Innovators
In Summary

q If you don’t measure you don’t know
q Monitor both sales and profits
q Focus on the key drivers in your business 
q Monitor chargeable hours
q Have fun 
q Take a punt




                                       Material Copyright of Business Innovators
Thank You!

Craig Rust
Business Innovators Ltd

Phone:     027 241 8371
Email:     craig@businessinnovators.co.nz




                                    Material Copyright of Business Innovators
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