Job Costing and Estimating

Small business owners are an underserved group. Tax planning and tax preparation should not be the only skills offered by the business’ advisors. And to small business owners, don’t be so stubborn. Read carefully to understand this discussion. This just might save your life long dream from collapsing.

Construction, roofing, and custom manufacturing are all business types that will benefit from a discussion of direct and indirect expenses. Most already know that direct expenses for a given job or project have to be considered in the cost. Direct expenses include the labor and materials used. It is the indirect expense that is most often forgotten or mistakenly allocated to job cost. The indirect expense is a cost that relates to all jobs or projects and not to one job specifically.

Examples of indirect expenses include: depreciation on machinery and equipment in the production process, depreciation on plant facilities if owned by the small business, rent on the plant facilities, shop supplies, vehicle expenses, utilities, insurance, and the compensation of supervisors, plant managers, and owners of the business. And of course, don’t forget about payroll taxes. There could be other indirect expenses in a given business, but the aforementioned will serve to demonstrate my point. It is also important to mention here the compensation of the business owner or owners. If the owner participates in the production process, a portion of compensation (or all) should be treated as an indirect expense to be allocated to the job cost.

Now that there is a list of indirect expenses, how should they get allocated to the job cost? Typically, indirect expenses are allocated based on direct labor dollars, direct labor hours, or direct materials. My personal favorite method of allocation is based on direct labor hours. If there are 20 direct laborers in a given business, and each is projected to work 1,900 hours annually, there will be 38,000 hours of total direct labor in a given year. If the summation of indirect costs is $1,500,000, this business will have an indirect cost per direct labor hour of $39.47. If my average hourly wage for direct laborers is $25.00, then total cost per direct labor hour is $64.47. If this particular business desires an industry average gross margin of say, 36%, it will need to charge $100.73 per labor hour. This billing rate is determined by using the full absorption method of accounting. Full absorption accounting is a required “generally accepted accounting principle” and must be used in all external financial statements unless otherwise disclosed.

Now, I can hear the naysayers from the cheap seats, “what if the market won’t bear this”? Well then, the business will have to accept a smaller margin, shop around for lower direct and indirect costs, or understand the behavior of fixed costs and “economies of scale”(a discussion for another article). The point of this article is to ensure that a business covers all of its production costs. I hope that I never hear again a small business owner say: “I am busier than ever, but I don’t have any money”! As always, the small business owner is free to do as he or she pleases. However, it is important to remember that my way is better.

Why Your Community Bank Is Better Than a National Bank

In this day and age of national and international financial institutions proliferating throughout even the smallest of towns, it can sometimes be hard to find a local community bank. If you are lucky enough to have one nearby, you should definitely use it for all of your financial needs. You might think a larger branch can offer more services and better deals, but that is a fallacy. Here are some of the reasons why your local branch trumps the big ones.

Service

The keyword to focus on for a community bank is “community.” Everyone who works in the building, from the night janitor to the security guard, and the rookie teller to the owner and president, is from your community. They know who you are even if you lose your wallet and desperately need to take money out, even without a photo ID or debit card. They know that even though you are occasionally a few days late on the mortgage, you always pay it. The large multi-state and multinational institutions will hire some local tellers, but there is a good chance management will not try to establish a personal relationship.

Connections

Furthermore, the people in your local branch know the people that you will be doing business with throughout town. If you run a restaurant and you need to do renovations, your branch will talk with your contractor and find out exactly how much it will cost you. If it is too much for the bank to loan, they can tell the contractor that, and see if he or she can lower their bid. Living in the same community with their customers will make the bank and its employees want to do everything in their power to satisfy you.

Perks

Some of the large branches can offer free checking, but only if you have a certain number of direct deposits a month, totaling a minimum specific amount. Otherwise, they will charge you a stiff penalty. Almost all of the bonuses that large institutions advertise come complete with a lengthy amount of fine print. Your community bank doesn’t mess around with those gimmicks. If they say free checking, they mean free checking, whether you have a nickel or a million in the account.

In conclusion, there is little that a big branch can offer you that a community bank cannot. The government backs both financial institutions. Your account is just as safe if your institution is headquartered in your town of 10,000 as it is for one headquartered in London or New York.

Go Paperless With eStatements

Save time. Save space. Save money. Save a tree! Environmentally conscious and security-minded people are choosing to receive eStatements in place of traditional paper statements. Most Credit Unions offer this service free to their members. If you are unsure of making the switch to digital, this article is for you!

What is an eStatement?

eStatements are electronic copies of your account statements that you can view, search, save and print online anytime, at your convenience! Your credit union or other financial service provider will send you an email notification alerting you that your monthly statement is available to view online. The statement will be found through your online banking portal and will look the same as your paper statement, just electronic!

You won’t miss paper statements with these benefits!

They’re Fast:

eStatements are available online, days sooner than paper statements that arrive by mail. When you receive paper statements, you may be waiting three to five days before receiving it in the mail. eStatements take out that wait time.

Convenient:

No need to file away paper statements; eStatements are stored for you online and archived for future reference!

Declutter your life:

We’ve all been guilty of stacking our mail, and chances are your bank statements are a part of that pile. eStatements can help you take away the clutter as your organize your statements in your online banking portal. If you ever need to reference the statements again you can easily access them with a few simple clicks.

Provides Security:

Access your eStatements using your secure Online Banking account login. e-Statements are not sent by e-mail or by paper to an unsecure mailbox. The reality is, paper statements are exposing you to potential security issues. 85% of identity theft occurs from lost or stolen paper records like statements in your mailbox. They have information you do not want everyone to see, like your name, address and account number. So keep that information safe with eStatements.

Environmentally friendly:

Not only will eStatements save you clutter, time, and provide security, they are also an environmentally friendly choice. eStatements save paper, ultimately saving trees and less strain on the environment! Choosing eStatements means you will be making a positive impact on the environment by removing the need for paper statements.

By switching to eStatements your can:

Save 6.6 pounds of paper.

Avoid use of 4.5 gallons of gasoline to mail them.

Avoid release of 63 gallons of wastewater into the environment.

Avoid producing 171 pounds of greenhouse gas emissions.

Those are relatively small numbers on an individual basis, but just imagine the significant impact if everyone starts saying “yes to eStatements”.

Making the switch to eStatements is a very simple process and you can probably make the switch within your online banking portal. Join thousands of other credit union members who have made this simple switch that makes a big difference in their lives and the environment. Sign up for eStatements today!

Appointments – Manage Your Time Better At Home to Be Effective

What would happen to you if your home life was more organized than it is right now? Can work-life balance be achieved? What are the tools at our disposal? Could scheduling appointments and keeping them at home help us save time and prioritize?

What is the challenge we face? I sometimes find that time spent at home can be the busiest time, especially in the times we live in. Imagine someone working from home, home-schooling children, and sometimes even doing a side hustle. Imagine also the full-time home-based entrepreneur. How do they manage to do all they need to do in a day?. We are living in a time when many entrepreneurs and even company employees have adopted work- at – home culture. This comes with its challenges as the lines become blurred between home and work. These blurred lines and constraints on the limited resource called time result in over-worked, under-rested, burnt-out individuals. Whilst good time management has been encouraged and indeed, embraced in the workplace, I believe more needs to be done in changing the mindset for the elusive work-life balance to be achieved.

What are the tools at our disposal? To manage time effectively at home, there are many interventions one can employ including setting goals for the day, prioritizing wisely, setting a time limit for every task, organizing oneself, and instituting the discipline of appointments. Yes, an appointment at home! We can spend time pontificating on the pros and cons of each intervention, however, I believe we need to focus on appointments and see how this can powerfully change the course of one’s day regardless of whether it’s a workday or weekend. Life is busy as it is without any intrusions. The question is how do you handle the one who announces that they are at the gate. These can be friends, neighbors, a salesman of some product you do not even need. I am not promoting regimentation here but rather a culture of filling your day with what’s important. Everything that we succeed at is because we carefully plan and execute it. I am a firm believer that you cannot manage time if you do not manage yourself thus I implore you to incorporate planning and appointments into your repertoire. I am not talking about something I do not do. I have to achieve many things in a day therefore I set appointments with my work, others, and myself.

Could scheduling appointments and keeping them on the home front help us save time and prioritize? Whereas we have established that it is a normal business practice to set appointments and keep them, we need to abandon the liberal open-door policy of allowing all and sundry to have access to us as and when they please on the home front. Please understand where I am coming from. We each have greatness within us but for us to achieve it we need to culture great habits. Employing the use of appointments at home and seeing only those people you had agreed to see removes non-essential encounters especially during the most productive hours. I know this will vary with culture, geographical region, or even level of affluence, whether you live in a low density or high-density residential area, but doesn’t negate the need to be organized and effective. Controlling access determines how organized you are and how well you will work and rest when the time for scheduled rest comes.

What do we need to do differently? We need to be disciplined and diligent, learn to say no, now is not a good time, let’s make an appointment for next week. What are the benefits of this approach? You are not always fire-fighting to meet deadlines, You are not always tired because you have not taken time out to rest. You have set aside enough time to spend with your loved ones or a loved one. If you are a busy person, I am sure you appreciate what I am saying. Whether it’s time to work uninterrupted, family time, or “me-time”, it takes some kind of order to enjoy it.

I am not saying that those that come unannounced are bad people. No, not at all, they probably are people you enjoy spending time with. Nevertheless, there must be prior communication so that you can attend to your visitor(s) when it is convenient for both you and them. It can be quite disrupting and a whole day can just pass by without achieving anything that you had planned to do.

As we grow older we begin to appreciate that rest and recovery need to be scheduled. The fact that I am relaxing doesn’t mean that I don’t have anything to do. One therefore cannot assume that just because you are at home you are available. Maybe you have scheduled that time to rest. That is important. You need to make an appointment with yourself, spouses need to also set aside time for each other. Parents need to schedule a time to spend with their children. When you have some sort of order in your life you determine who sees you and who you see. It also means that your relationships will be healthy and that makes you a happier person.

In conclusion, I believe that the work-life balance can be achieved. There are many tools at our disposal just like it is in the workplace.I believe we could do more and be happier if we are disciplined enough to make only the commitments we can keep.I am certain that setting appointments and keeping them at home help us save time and prioritize.

Fitzgerald Mujuru, a fusion of Business Coach, Personal Effectiveness Coach, Business Consultant, Marketing Strategist, Sales Zealot, Speaker, brand builder, with over twenty years in marketing and sales for globally known brands. He has vast commercial experience at management level in various sectors. His strengths include marketing, brand building, sales, business development, business strategy, management, and equipping leaders and teams with strategies for personal and team effectiveness. He has handled various consultancy assignments for companies in professional services, media, communications, training and development, non-profit organizations. He has released 4 books and published more than 200 articles online.

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