Saturday, May 1, 2010

No-See-Ums on your P&L?

No-see-ums are tiny insects that are a bother in the South including the Caribbean. They are so small that they can go right through screen. They bite like a mosquito with the bite welting up into an itchy red spot. You can get dozens of them without even knowing it until the itch comes hours later. Often their bite is more annoying that the mosquito’s bite.
The same thing is happening on many of my clients P&L statements. They were smart and developed a budget before the year began. They break it down into monthly budgets and even weekly budgets and monitor them against actual sales and expenses. They are getting bit by almost invisible expenses from a variety of sources thus reducing their profits. “What are you talking about Dan?” Let me explain.
Since all of my clients are on Menu Pricing, they quote a complete price to their customers. A water heater replacement is quoted including all expenses needed for a complete to code installation. This would include materials, labor, warranty, taxes, and permits. What they are finding is the fees for permits and licensing are increasing as a way for cities, counties, and states to increase income. The taxes for use and sales tax are increasing, and the suppliers are increasing fees for deliveries, returns, and warranty handling charges. Disposal fees of the trash from the job continue to increase. You have these tiny costs and cost increases biting into your profits. These costs were not planned on when they developed their budgets.
Additional “No-See-Ums” include federal, state and local business taxes, business annual inspections, increases in unemployment taxes, base rates add-ons to your utility bills, waste and water bills. Unfunded mandates from the federal government and state governments trickle down to the local level where you are taxes, assessed, fined or charged to cover the costs. Of course the banks continue to increased charges for credit card processing and other services.
Other “No-See-Ums” include additional fees for your vehicles including higher license plate costs, higher tire and oil disposal fees, higher tolls, stricter traffic enforcement (traffic tickets), and stricter D.O.T. enforcement (truck inspections).
I’m sure there are many others I have missed in putting this blog together. It is vitally important as a company to earn a profit to stay in business. Watching the little things on the P&L as well as the big things can help in achieving the profits you planned for when you developed your budget. Break down your expenses into reasonable categories so you can quickly monitor changes from the “No-See-Ums”.