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Financial insight

Reading your figures, looking ahead and deciding on facts.

12: articles

What should a roofing company charge per hour when the weather counts?

An employed roofer costs you wages over about 2,088 hours a year. After holidays, rostered days off, sickness, weather and travel time, a worked example leaves just over 1,200 hours to invoice. So every billable hour must carry almost double the hourly wage, before contributions, van and profit.

16 October 20269 min read

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Financial insight

What should an installation company charge for call-outs, emergencies and an hour of work?

A technician on the payroll costs you every paid hour, but a customer only pays for part of those hours. That is why an installation company's hourly rate is higher than a self-employed plumber's. This is how you work out your prices and how you quote them to private customers.

16 October 202610 min read

Financial insight

How do you know if a price increase is wise?

A price increase is wise if you lose fewer customers than your margin allows. One calculation shows you where that limit lies. Research shows how sensitive customers are to price on average, and how they react to price changes.

15 October 20266 min read

Financial insight

Does an external controller or adviser make a business more profitable?

In experiments where companies received advice by lottery, productivity rose and the companies grew. What the advisers actually did, why it worked, and what remains once the adviser leaves.

15 October 20266 min read

Financial insight

How many key figures should you track?

Research gives no fixed number of key figures. But it does show that decisions get worse when there is more information than someone can process. This is how to choose a small set you actually use.

15 October 20266 min read

Financial insight

Do figures and dashboards lead to better decisions?

Companies that base their decisions on figures perform better on average. Large-scale research shows where that advantage lies, who gains most from it, and why a good-looking dashboard alone is not enough.

15 October 20266 min read

Financial insight

How reliable is a cash flow forecast?

A cash flow forecast is less certain than it looks on paper. Research shows that managers systematically make the uncertainty in their expectations too small. This is how to read a forecast, and how to make it more reliable.

15 October 20268 min read

Financial insight

Can a business grow itself into bankruptcy?

Yes, it can. When you grow, you first pay for extra stock, staff and work, while customers only pay weeks later. The faster you grow, the larger that gap. This is how it arises, and how to prevent it.

15 October 20266 min read

Financial insight

How much cash should a business keep as a buffer?

How large a buffer you need depends on how unpredictable your cash flows are and how easily you can get extra money. For half of American small businesses, the buffer covered less than 27 days of outgoings.

15 October 20267 min read

Financial insight

What is the difference between profit and cash in the bank?

Profit is what you earn in a period, even if the money has not yet come in. The bank balance is what actually came in and went out. That is why you can make a profit and still be short of cash, or have money in the bank and make a loss.

15 October 20267 min read

Financial insight

Is a business plan really worth it?

Yes, a business plan is worth it, but the effect is modest. It pays off most for businesses that are already running and for owners who keep adjusting their plan. This is what the research says.

15 October 20267 min read

Financial insight

Why do business owners often overestimate their revenue?

Business owners often overestimate their revenue, because they calculate from their own plan rather than from what businesses like theirs achieve on average. This is how that error arises, and how you make a more realistic estimate.

15 October 20267 min read

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