Financials

It is very possible to have a positive net income and have customers that generate losses. However, because your profitable customers cover these loses you don't see it unless you do a customer profit analysis. Customer profitability analysis requires you to determine the activities, revenue and cost of each customer. The surprising outcome of doing a customer profitably analysis is your least profitable customer could be the customer who generate

To appropriately price your services, you need to know what it costs. It is easy to determine the costs of items that directly go into a product or service. For example, in a product business you know the cost components you need to purchase your products (direct material) and the cost of time it takes to assemble those component (direct labor). In a service business, direct costs will mostly consist

One of the steps to creating a valuable business is creating a revenue forecast in your budget. The accuracy of your entire budget is highly dependent on you getting your estimated revenue correct. If you are too far reaching, your budgeted expenses will also be off. The ability to accurately forecast your revenue is highly dependent on two factors: A recurring stream of income: Recurring revenue means that you have

When doing competitive analysis, it is important to properly align cost with the predominant method used in your industry or you fail to compare apples to apples. The main goal of classifying costs is to determine the total cost attributable to one unit of product or service. When doing competitive analysis, you need to understand your costs for various reasons such as: Understanding how you compare to your competitors. If

Planning for growth disciplines business owners to look ahead while allocating the needed resources to meet growth goals. If you know where you are going, then it is easier to take short term actions to there. There are many different paths to growth. However, regardless of the path one chooses to take, one most consider the costs involved in achieving the required growth. In this article, I will be discussing