The full podcast covers all “9 Secrets,” but if you’re on the run and want to pick up the FIRST secret (with Randall Soules and Diane), you can do it in this quick 3-minute video…
Discover how to turn your company’s QuickBooks into a Gross Profit-building machine with the Construction Accounting & Management Program (CAMP)!
Click for a peek “behind the curtains” to see what the CAMP training “campus” looks like…
Transcript
Randall Soules (00:00):
Having the right setup and the right accounts is so important.
Diane Gilson (00:03):
That's one of the secrets to having QuickBooks do what you want it to do. And that's the first one. It's like having a good blueprint before you start building something, You've got to have a good structure to work with. Otherwise things don't work well! <laugh>
Randall Soules (00:17):
So, yep. You don't get the right reports.
Diane Gilson (00:19):
Exactly. Today, [in the full podcast] what we're going to be talking about are nine ways that you can maximize and manage your Gross Profits. I like to quote Peter Drucker and what he says is, "What gets measured gets managed." And so we're going to talk about how we can use QuickBooks to make that happen.
The first major thing you have to have is the right amount in your Gross Profit stream. So, a lot of consultants say that the owners should be able to take about 10% of gross income out of the business and still have 10% left on the bottom line to compensate them for the risk (and so on) that they have [invested]...
Randall Soules (00:54):
That's a healthy business right there.
Diane Gilson (00:56):
It would be, yes. I'm going to start out here and talk about the first thing that you can do, in order to get on top of those gross profit numbers, is to use QuickBooks to enter your detailed cost estimates.
And one of the secrets in the background is there's something called Items. And there are a very good set of tools available in QuickBooks to enter those estimated costs. You can enter estimated costs as well as estimated income.
If you have a pretty comprehensive list of estimated costs, and you can see exactly how much a job is going to cost you, you're going to be able to price more accurately so you can resist the pressures that you get from clients to drop your prices. If you know exactly how much a job is going to cost you, and you know how much you need to mark it up, <laugh> in order to still get the Gross Profit that you need to run your company properly, you're a lot less likely to buckle when they start talking about, "Oh, well, you know, can't you take that down about another 10%?".
When you realize that that 10% is everything that's going to hit your bottom line, you can be a little bit more resistant. If you don't know your numbers and you don't have them in a good estimate, then you're much more likely to waffle and go ahead and give in,
Randall Soules (02:13):
Yeah. So many times we had to use that strategy. When we delivered high-priced items, we'd go in and put a kitchen at $95,000 and they, of course, that's a tremendous amount of money for 'em, and they feel like you can come off that.
But when I go into a sales visit like that, my estimator convinces me that there is no wiggle room here. Once I know my numbers, I can say, I'm sorry, but we can't change this without changing your design.
Diane Gilson (02:39):
Confidence! I think helps tremendously when you're presenting prices. And of course, you have to understand your value and so on, but you've got to start with the numbers and know what they are. So using QuickBooks to get that recorded is the first step in being able to monitor things as you work your way through the system.
The second way that people can use QuickBooks to help manage their gross profits is to...