The foremost concern of anyone
who starts a house cleaning business it how to get
his slice of the market – getting enough clients to
keep his business up and running. However, in the
excitement that goes with the seemingly booming
business, the goal of making profit is sometimes
lost or forgotten, maybe simply put in the
backburner. Bear in mind, though, that business will
be very short-lived if the cash flow is not
balanced, that is more money going out than money
coming in.
For someone without formal training in business or
accounting, the numbers game can be daunting if not
overwhelming. You do not claim profitability or
business success simply because you see a ton of
money coming in and going out. After factoring your
accounts receivables as against accounts payables
and depreciation, the true picture of your balance
sheet will unravel. You don’t have to be a rocket
scientist, nay an MBA holder, to figure out whether
your business is in the profitable side or on the
losing side. A basic accounting knowledge can help
you understand more the financial side of your
business operations.
Profit is very easy to figure out as it is simply
calculated by subtracting your expenses from net
income. For a job where you charged your client $300
minus $150 expenses, your profit easily translates
to $150, such profit being on paper only until your
client actually pays his bill of $300.
The financial viability of your business is measured
better in terms of cash flow which is the cash
receipts less cash payments for a certain period of
time. This is an area in your business operation
that must be constantly looked into. There is a
positive cash flow when the money that comes in will
be more than the money that goes out. Cash flow
portrays a better picture of your financial
situation.
Another business aspect that the business owner
should look into is the profit margin of the
operation. It is simply illustrated in terms of how
much the business keeps for every dollar that it
earns. Profit margin can be determined by dividing
income by net profit by sales, expressed in terms of
percentage points. Profit margin is dictated by the
market conditions and the geographic area of your
operation. Rising labor costs, especially in states
where the minimum wage is higher, and the increase
in the price of almost all commodities result in
shrinking profit margins. The best remedy to this
decline in profit margin is an effective cost
cutting measure like cutting down on number of
employees without sacrificing the quality of
services rendered.
If profit starts coming into your house cleaning
business, the question that is normally asked is
what to do with the money. If you aim for more
profit, you will have to stimulate growth in your
business. Reinvesting your profit for business
expansion will be a good idea to consider.
Purchasing new equipment or giving salary raise to
employees will definitely spur growth. In the end,
more profit can be expected.
