By using certain proven budget strategies and the proper financial approach you will be able to improve your profitability and enhance your current cash position. In the order of priority, we will consider each of the following financial sales and expense areas in the budget process to make sure each of these actions is considered and prioritized properly to insure the creation of the optimal budget.

 

The first five things, listed by priority that you can do to improve your profit are:

1) Increase the selling price.

2) Decrease and control the direct costs (labor and MESO).

3) Decrease and control the variable costs (associated costs to direct costs).

4) Increase the sales volume.

5) Decrease the fixed costs.

 

FIRST

The first thing you must do to increase your profit is to increase the selling price. Most companies currently have no way to insure that annual price increases, including even small cost of living increases, are implemented into...

Licensed business appraisers are required to consider all of the 15 to 20 (some say more) conventional valuation methodologies for each valuation. Since each of these methods is considered...

The dual overhead burden rate method of job costing/pricing is considered the most accurate method developed to determine your company's burden rates to enable the proper pricing of your job or product. This is due to the fact that the dual overhead rate method applies a company's burden costs to both direct labor and the sum of Materials, Equipment, Subcontractor and Other (MESO). The TASCON^® Business Analyst calculates the dual overhead burden rates automatically in one "click". Most companies use a single overhead burden rate that allocates all of their burden costs to direct labor only. Unfortunately, most don't know how to calculate their real "costs of doing business" and the burden rates they use are "rules of thumb", those used by others or from some other source.

The Dangers of Using a Single Overhead Burden Rate System

If you use the single overhead burden rate system to price and bid your work, for those jobs and/or products that use a disproportionately higher amount of direct labor than your company's average percentage, you will be overpricing your work and probably won't be awarded any of these contracts. Conversely, for jobs and/or products that use a disproportionately higher amount of MESO than your company's average percentage, you will be under pricing your work and lose money. Unfortunately, you won't even realize...

The chances are that your company’s income statement is currently formatted in exactly the same way as one of the income statement “templates” that came with your existing accounting software. DON’T USE THEM! These “templates” are usually designed to follow GAAP (Generally Accepted Accounting Practices) but are typically not designed for proper management information systems (MIS). I want to suggest that you consider formatting your company’s income statement and budgets in the same way that is found within The TASCON® Business Analyst SaaS (www.TheBusinessAnalyst.com). The reason is simple, it utilizes powerful proven and successful business profit strategies that if used, always lead to profit increases.

One of the key strategies that we will discuss evolves around the fact that different expense items fall within different expense categories and the expenses in each category will react in a similar way in relation to the sales income. Using this fact,...