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E-Myth – “Why most small businesses don’t work & what to do about it”

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Business Consultant | Keeping Cost of Sales

Business consultant states that there are a lot of particular similar, yet different idiosyncrasies in terms of a lot of revenue and direct cost of sales. This is in particular different with a lot of the more professional businesses such as a medical practice, a dental practice, or in optometrists practice. For example, if you are a medical practice and a position, you’re going to potentially have an associate doctor working in the same clinic. If in fact you do, you do not want to know how much your billings are as opposed to what those particular billings of your associate is.

Likewise, for most practices it is the associate physicians who are paying them a percentage of their particular billings from within your practice. A lot of dental practices might think differently and might have a lot of video secrecy is in terms of how they pay their hygienist for example if you are in a dental practice.

However, business consultant states that it is a different revenue stream if you are in a dental practice versus a medical practice. It is the dentists, that can be paying much higher costs for lab work. Often they’re going to have a lot of big lab costs and a lot of big overhead costs. Likewise, the optometrist as well is going to have a lot of not necessarily lab costs, but overhead costs as well. Considering the fact that you have to attain and account for glasses and contacts.

Make sure, business consultant advises, that you put your income statement in one single solitary piece of paper. Even the big conglomerates have their income statement in a very clear and concise piece of paper. They do not money the waters with unnecessary information so as to make very quick business decisions and very accurate ones. For optometrists, there going to be billing with an associate as well. They’re going to have to include a lot of the cost of their inventory. Lab expenses are also something that has to be taken into consideration and must be talked about with their charter professional accountant.

Make sure that you’re not grouping everything together. They’re going to have a lot of the good break down analyses done by your charter professional accountant. Your overhead will then stay consistent than your direct cost. A lot of having them separate makes it far more easy and former comprehensive in understanding what your break even point is potentially going to be. As well, let’s talk about the trades. Those would particularly be separate projects, and you can Bill and bid on as many projects as you can comfortably take on. That is natural in what can go up and down is your definitely not going to be a bidding on different projects. The service work can potentially flow in and it could definitely be very busy months and very quiet months. You have to understand what is difference between a lot of those two items because you are definitely acquiring that business in a lot of different ways.


Business Consultant | Stating Cost of Sales

Most businesses, says business consultant, should take heed and have three or less business accounts. Any more than that and will just create far too much work for your accountant and it would be far more convoluted for you if you are ever to dive into understanding your finances. The more accounts that you have, the more classifications you’re going to have. You’re going to still do reports on items and you should be able to put all of your incomes and expense accounts on one page and still make good, solid business decisions. Those business decisions can be made very quickly and concisely after reading a very easy business statement.

For example, restaurant which only serves food only has one particular business account. However, business consultant states that if that particular restaurants decides to dive into another particular retail business such as clothing, then they are going to have to have two business accounts. Often times what happens is the direct cost of sales are going to go up however not necessarily a bad thing in terms of your profit and loss for that particular month or that particular year. Your direct cost directly fluctuates and hopefully is a very protectable margin, depending on how much work that you do and how organized yourself and your charter professional accountant are. If you can work easily and quickly together, it will be far easier to understand as you are going to both be on the very same page.

Business owners take heed as they are not entirely sure and are very confused in what belongs in their revenue and direct cost of goods sold sheets. They have no idea how many accounts that they should account for. As well, without the knowledge of a charter professional accountant, they’re not necessarily going to know how to submit any of their files, any other year end reviews, GST, etc. Business consultant states that it is paramount in that they definitely have to think about getting organized and it is going to be a very tall order if they have to get themselves organized and run a business same time. The money that you spend on a charter professional accountant is worth its weight in gold as they will be able to organize you and take a lot of work off of your shoulders.

Make sure that if you are a tradesperson, you’re definitely going to have to break down a lot of the labour, subcontracting, and the materials that that subcontractor or yourself are going to need or going to use. Those particular ones, are going to be broken down separately as there are some very different tax treatments in how a lot of the employees are going to be handled in both those particular scenarios. A lot of the materials have different tax treatments as well. You’re going to be breaking down a lot of the goods sold between yourself and your contractor.