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Profit comes from charging the right rates

Published on: July 1, 2019

JobBag has a feature called the KPI Model. It uses your data to create a Financial Model of what your business might achieve. Of course, as we all know, there are many variables that can dramatically impact results – so the KPI Model gives you the ability to tweak and adjust – find the sweet spot for your business and create your own unique KPI’s.  

It’s easy to use and very straight-forward. The KPI Model starts with a list of who is working for you and their costs. The data comes directly from JobBag, nothing for you to add. JobBag already knows the hours your staff work and the percentage of their time that is chargeable. Then, you can model overhead costs and set a profit target.

With that, the fun begins. You can tweak the charge rates, change the percentage of time that is chargeable, etc. and see exactly how those changes impact on your business performance.

It’s just like saying Hey presto! 

In real time, JobBag will report:

    •    how much it costs to have your team available

    •    how much overhead you are really carrying, and;

    •    most importantly how much you need to be charging to make the profit you want.

The results may surprise you. By tweaking the variables, you’ll set KPI’s that you and your team can follow which, no doubt, will delight you. 

Why you should use it

There is always uncertainty in business, about what will really happen, when will you lose a client, will they really spend all their budget with you, when will you need more staff and what impact that will have on your business.  The purpose of the KPI model is to make you aware of the most important drivers of your profitability and what you can do to protect and grow your business. 

When you should review it

At the very least you should be reviewing it now. Once a year is a bare minimum but realistically you should be reviewing it any time your business is changing or you aren’t getting the results you expect.

Your KPI model is going to give you a powerful understanding and some simple numbers to look at in JobBag on a regular basis. It’s not hard, you just have to do it.

Why we developed it

The KPI model came out of various conversations with clients who said they wanted us to show them why their business wasn’t going well. They wanted to understand what was making their business tick and what they needed to charge in order to make a profit.

I’d been doing a presentation to clients and prospects about the leaks in their business but it was when I sat them down with the KPI model that they finally saw clearly what their business was capable of producing. It was then a short step to show them how their business decisions were creating leaks. It was, and remains to this day, the most powerful tool to seeing what your business is capable of achieving.

What do you do next

Updating the KPI model will likely change your expectations for what your employees can do, so the first place to start is making sure you update the employees with their new cost rates, charge rates and chargeable percentage. 

It’s also important to monitor actual performance against your expectations. That means looking at your Dashboard each day so you can quickly see what is happening. We also suggest looking at the Time Variance report. All of these will keep you in touch with what your business is really doing. It’s your early warning system.

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