Marginal Revenue Vs. Marginal Cost (MR>MC)

Every Day You Are - Presented With opportunities to invest your money and the key strategy is putting your money to work where it will earn you the most bottom line profit and increase your cash flow.

What Are Opportunities? - Tools, equipment, vehicles, software, outsourcing, real estate anything you could use in your business that has the potential to increase revenue or reduce expenses.

Some Opportunities- Are worthwhile and some are not. The answer is having a system to quickly and easily determine which opportunities to pursue and which ones to ignore.

Do Not Trust Your Gut - It may sound strange but your gut will lead you down the path of mediocrity or destruction depending on the size of the investment. The reason is there are far too many variables to consider and here are seven of them to get you started:

1. Have you calculated your company's current hurdle rate?

2. Is it a simple one-time investment?

3. Is it a large purchase with a down payment and subsequent monthly payments?

4. Does it require monthly or annual maintenance contracts?

5. Have you completed present value calculations?

6. Have you calculated the Internal Rate of Return (IIR)?

7. Have you considered discounted cash flows?

Complex Decision Modeling - And statistical analysis is best; however, for a construction company with annual revenues under $5,000,000 it is overkill, similar to hunting house flies with a sledge hammer.

We Have Simple - Tools to help our clients make intelligent informed decisions on which opportunities to accept and which ones to reject.

For Any Opportunity Give Us Six Pieces Of Information:

1. The initial cost of the tool, equipment, service or item?

2. If it is financed what are the payment terms?

3. The monthly or yearly maintenance cost if any?

4. How long you expect the tool, equipment, service or item will last in terms of weeks, months or years?

5. How many minutes, hours or days of labor it will save in a week or month?

6. The hourly base pay of the person that will be benefit from the tool, equipment, service or item?

From The Information - Provided and some reports we can get from your Properly Setup QuickBooks file we can generate a simple analysis you can use to make an intelligent informed decision.

Dual Monitors Example Adds $3,287.16 To The Bottom Line!

• An in-house or outsourced bookkeeper has only one 19" computer monitor

• The tiny numbers are hard to see which causes eye strain

• The bookkeeper is wasting 30 minutes a day due to poor equipment

• Every year this construction company wastes $821.79 in bottom line profits and cash flow!

The Solution

Invest in dual 27" DVI monitors for an estimated cost of $600.00

• The first year added bottom line profit and cash flow is $162.00

• Total added bottom line profit and cash flow over five years is $3,287.16

Increase Sales Or Reduce Costs - The two main drivers of profit. Best practices from successful construction companies show they do both. The key is a thorough analysis on a case-by-case basis for each opportunity.

The Example Shown Above - Should take about fifteen minutes if your QuickBooks setup is correct and maintained so that it generates accurate useful reports.

If Your QuickBooks - Is not generating accurate reports contact us immediately because most business failures can be traced back to a lack of Key Performance Reports and bad bookkeeping.

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Why Some Construction Companies Earn Obscene Profits!

Success Is A Few Simple Disciplines Practiced Every Day - The construction companies that make a lot of money regardless of the economy, competition or any other external distraction are the ones that practice C.A.N.E.I. Continuous Never Ending Improvement. The example below shows a fictional sample construction company that makes one minor improvement every week.