Did you know that your Profit and Loss Statements and your Financial Statements can help you predict and shape the future of your company?
If you know how to evaluate and understand your P&L’s and your Financial Statements you will not only figure out your break-even points, but you’ll understand how regular evaluation and segmentation of your client base or market can help you create a strategic financial blueprint to more profitability.
I have a client who is a manufacturer. We segmented their market into four types of clients they served and utilized “job costing” in each category. The segments broke into the following categories:
- Store Front
- School Related
By utilizing “job costing”, we discovered that there was too little profit in the Hotel segment and that those jobs were sucking up a lot of resources. If we looked at just the direct materials and the direct labor costs, they actually looked profitable. However, when we factored in manufacturing overhead – the Hotel sector was not profitable.
They eliminated pursuing or accepting jobs from the Hotel sector and realized a 3.3% increase in revenue the following year – without really doing anything else different. Their net income went from approximately $75,000 to $230,000 in that time. That’s a significant return on investment!
Companies that utilize our Blueprint for Profit model regularly experience increased revenue and tax savings.
Craig Auer, Principal at AuerCPA Co., is a CPA ,Tax Reform Specialist and Chief Business Strategist with over 30 years’ experience helping small business owners focus on their day to day business while he focuses on the fiscal health of their company. AuerCPA Co. is a boutique accounting agency that has a team of professionals who are ready and dedicated to helping small business owners, small manufacturers and company executives run their businesses with ease by providing financial guidance for their organizations.