Every business on the planet (and I would imagine those on other planets as well) have activity and they do that activity at an average rate.
For a Plumbing business it's chargeable hours at an average hourly rate. Builders and Consulting Engineers are exactly the same. For a retail Dress Shop it's number of sales at an average sale price. A Hairdressing Salon is exactly the same.
It starts with understanding your overheads for the year. From Accounting Fees to Zoological Expenses. What do these total?
Then, still with you, we look at your direct costs. Clearly Cost of Goods Sold is important for retail businesses. Hairdressing Salons and the like use product in the course of making a sale.
We then build a desired Net Profit into those numbers and the final outcome is your business' Activity Rate Target.
This becomes your weekly target. When we do this we do not focus on your monthly MYOB or QuickBooks or Xero printouts! There is a time and a place for monthly Profit & Loss and Balance Sheets but not during ARTWorks.
This is about knowing on a weekly basis how many sales you need to make and at what average sale price you need to make them in order to cover your direct costs, your overheads and to make you a profit. Your Activity Rate Target!
Our ARTWorks software does this. Do you know yours?
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