Have you ever received your company reports back from your accountant and seen that you'd made a profit and thought to yourself "awesome but where is it?"
Similarly if you've received your reports back and not made a profit and thought "but we did so much revenue, what happened?" then this article is likely to really help you make sure you are getting what you should from your business.
Just because you answered no, doesn't mean you won't find this article quite useful as it has a few tips for making a real profit from your skip hire business.
There is a trap, don't fall into it
Most business owners look at their bank to see how they are going, if they have lots of cash they think "I'm going awesome", if they don't have enough they think "I need to collect any outstanding invoices and make some sales".
This is good but it doesn't really help you make sure you make a profit and have it to pay out as a dividend, in fact chances are high that while you "made a profit" you spent the cash on "growth".
If this sounds familiar to you and you're thinking but isn't that what everyone does, I've got some news for you, just because everyone is doing it does not make it the right thing to do.
Are you the bank?
Here's another way of thinking about this, are you the bank for your business? If you are not a bank why are you essentially loaning your business cash to help it grow? Why would you do that without expecting a return on that cash, or will that come next year?
If a bank was going to loan your business money for growth (in the form of new skip bins, trucks, overdrafts etc) they would expect your business to pay interest and fees. If you are doing that for your business, shouldn't you be expecting that as well?
I don't know about you but if my money was invested in a business then I'd want to be getting a return on that money.
Ok you've convinced me, what am I supposed to do?
My suggestion is reading Profit First by Mike Michalowicz which is what helped me to understand what was happening to my profits. You can get this book on Audible and listen to it in the truck or read it in its physical form. This book is worth every penny and then some.
It will teach you how to use a bucket system not un-similar to that which Scott Pape teaches people to use in their personal finances in his book Barefoot Investor.
One thing I'd point out which is an advanced use of the system is to manage the cash needed to pay for disposal of material that cannot be recycled you could use an additional account. This will help to ensure you always separate the cash needed to dispose of waste rather than wondering where all the cash has gone.
If your thinking, "you just make software for skip bin companies, what would you know", then I'd point out that the point of every business is to make a profit. Just like you I own a business now and have had businesses in the past and I wish I'd read about this way of doing things when I had them.
If this sets you on the path to not just making a profit, but putting profit first then send me an email because just like Mike I'd love to hear about it :)