Job Costing For Small Business Success

Job costing is one of my least favorite tasks to do, but it’s an essential part of any successful business. It’s usually a detailed process, I think that’s why that’s why I’m always dragging my feet when it comes to costing out jobs.

For each job you do, service you perform, or widget your small business makes you should sit down and do at least a quick cost analysis to make sure it’s profitable.

Some things you should consider include:

• Your time, or the time you’re paying an employee (wages).
• Direct costs, including the cost of materials to create the product or service.
• Indirect costs, such as the cost of electricity, heating, office expenses, or rent.
• To do job costing effectively you should look at each individual job or product, then look at how they all go together as a whole.

There can be even more involved in some jobs, but these are the basics. If you’re costing a service you need to think about what goes into the service, time is probably the most important factor.

When you have costs figured out, it’s time to consider how much you need to make for your time or item to break even, or to make a profit.

Doing this will help you determine what is profitable for your small business. What are you making money on? What are you losing money on? Are there some things you just need to let go? Is there a way to cut costs and make a job profitable?

Job costing can be very involved, and I definitely don’t have all the details here. If you have a hard time figuring it out on your own, visit an accountant, maybe you they’ll even trade business services with you.

Job costing isn’t fun, but it’s one of the most important things you can do for your small business success.

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