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As I continue to travel throughout the U.S. helping businesses better themselves, I notice there are three major aspects of business that are troubling to most.

1.Job Costing
2.Structure/Organization
3.Sales and Marketing

In these difficult times, we need to feel better about how our business operates day-to-day, where some of us are struggling to figure out a way to become more profitable, and to be better organized for the sake of our sanity and employees. We also desire the ability to realize an ROI on all of our marketing efforts.

Some of my client solutions are simple and some of them are very complex. I am going to try and define a few simple tips in this article, where I will get into more detailed solutions in future articles.
Here goes.

Job costing is rather simple in the sense that we need to capture data and turn that data into information. In other words, there will be more work involved in capturing the basics needed to figure costs than actually producing relevant information from that data.

Job costing requires three variables, where we have to recuperate our costs when we sell something and the cost of selling what we sell is imbedded in our operations. In other words, we have to recover the three variables in what we sell.

Operations cost raw materials (COGS), labor and labor burden (payroll taxes, worker’s comp, insurance, etc) and operations cost us a percentage of our entire enterprise, or our building, electricity, general liability insurance, etc, etc.

So, the three variables are:
1) COGS
2) Labor (time) & Labor Burden
3) Overhead

Once we have captured these variables in the sales price of what we sell, we have won half the battle. By the way, winning have the battle is called breakeven.

Breakeven is the price that is not a loss nor is it a profit. In other words, we now have the opportunity to add profit to what we now know is our costs that are covered the second we sell what we sell.

Capturing the data that will feed information into a pricing model is actually complex in that we really have to catch time and record it.

Some business owners believe that doing a time study once a year is sufficient when capturing time.
Not true. You simply cannot capture time once a year, especially if you have many items in your inventory to sell.

Some businesses take the simple way out and buy technology that reads times per event, where I can confidently say that this is not the best solution being that you have not solidified your processes.

In other words, you have to understand what in fact you actually do as a business. Rather, how do you go about the production of your product or service?

Part of my Operational Accounting methodologies allows us to take a helicopter view of the business to find out exactly how we produce our products.

This allows us to capture processes as well as identify the varying stages in producing our product that require time.

For example, one of my best successes in understanding process via this helicopter view allowed me to identify for my client all that is involved in producing his metal boxes.

Not only were we able to capture time via every bend, weld, grind, paint and assembly of his boxes, but we were also able to increase efficiencies by realizing that some inherent processes were in fact creating bottlenecks.

We concluded this project by identifying hour much time it takes to make his boxes, factoring that figure with his cost of material and adding his labor burden.

Once we had this figure, we were then able to factor his profit margin. Yes, profit margin.

We must note that profit margin is not simply adding a percentage to material cost. Do you ever wonder why your business is always broke? It is probably because we are adding the wrong percentage to the sale price of our product or service.

Do you wonder why your Accountant or CPA never talks about job costing? Accountants and CPAs are tax professionals, not operational professionals.

I have built my business around Operational Accounting methodologies that are real and work for many clients with great success.

Most of my prospective client inquires come from frustrated business owners who cannot get a handle on their profits, much less their costs.

As this global economy continues to get tighter and tighter, we must ensure our businesses operate as they should. You owe yourself the benefit of a profitable, successful business.

What I have discussed here relates directly to the importance of structure and organization in your business. Having structure in your business allows you to manage and control costs to realize profitability.

Do not believe that your business is not entitled to profitability in this economy. All business is entitled to profitability regardless of external pressures. How our businesses are structured and organized is what makes business owners successful.

Luis Luarca is the Managing Partner of Allectus LLC, a management consulting company helping small to mid size businesses. For an extended version of this and other articles, visit http://www.allectus.com.