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If you own a small business, you can get caught up in theday to operations and not have the time to think or even sit down and calculateif your business is even profitable.
I don’t mean that the bills are paid eachmonth and that everything is paid on time without issues. At the end of theday, month and year did you make any money? Was there anything left to save andinvest for the future or to spend on improving the business operations?

I focus here mainly on the Rosenberg TX Pool Service Business, but youcan apply this to any small business. If you’re not making money on yourbusiness, it isn’t a business, it is a hobby. So how can you tell if yourbusiness is turning a profit? That can get a little tricky, but I think if youlook at it in a clear fashion before taxes and deductions you can see if thereis any money going towards profits. If all you are doing is paying your billseach month you may not be making any money and may be “just spinning yourwheels.”

The first thing you should do is to make sure your businessexpenses and personal expenses are within reason. For example, you are notleasing a truck for $1,000 a month for Rosenberg TX Pool Service. Or you are not spending$1,500 a month on eating out at restaurants. Later when you are making hugeprofits this may become a new normal, but for now I am talking reasonablebusiness and personal expenses. So, once you have nailed that down we can moveon to seeing if there is a profit in your business.

Take your monthly Gross receipts and then start subtractingyour monthly expenses. For example, if you make $6,000 a month from yourservice accounts and you spend $2,000 a month on chemicals and supplies,licenses, fees etc., your Gross Net profit before taxes would be $4,000 a month(You can’t deduct fuel costs). That would be $48,000 a year. So, when you fileyour taxes this would be your net income minus the deduction for mileage orvehicle expenses – depending on which deduction you take. Let’s say you drive16,000 miles that year for business and take the mileage deduction of .53.5cents that would be $8,560 – if you have no other business deductions yourSelf-Employment income for that year would by about $39,000. If you are in the12% tax bracket you would pay about $4,700 in Federal Income Taxes on your SelfEmployment Income. So, your net profit for that year is around $34,000 or$2,800 a month. So, with a gross income of $6,000 you will net about half thatmoney each year.

After you pay your household bills with the $2,800, what isleft over in the bank? If it is less than $500 you are probably not making aprofit. You can do several things at this point to start making a real profit.You can go out and get more service accounts, raise your rates or fine tune theway you do business. For example, if you are doing an installation of a pumpand you are charging $200 for labor but the job takes you 3 hours and you dothis type of job once a week, you might be better served to refer the work outand use that time to service more pools. By building up more service accountsand doing less time-consuming installs you will increase your monthly grossmore quickly.

Or you can add services like Green to Clean or Acid Washeswhich bring in good money and can also add new service accounts. Adding twoGreen to Clean and one Acid Wash each month can bring in an extra $1,000raising your gross income to $7,000 a month. Or if you connect with a HomeWarranty Company and they refer you multiple new equipment installs each monthyou can boost your gross income up even more. There is a “Tipping Point” withrepairs – don’t do enough of them and it is a waste of time and effort. But ifyou do enough of them each week to make it worth your time, you will make moremoney doing repairs verses regular Rosenberg TX pool cleaning.

You can also bring your total cost of chemicals and suppliesdown each month by giving your customers less free items and charging for morechemicals. The standard practice in my area is to give the customer freechlorine and acid but charge for all other chemicals and services. If you are cleaningthe salt cells for free, start charging $35 per cleaning. Giving customers freepump lid O-rings or other free items, start charging for everything. You arenot nickel and diming your customers if you charge for everything. A lot oftimes these small, $5 here and $10 there are causing you not to make a profit.So instead of $2,000 a month is costs you bring it down to $1,500 (25%),bringing your gross net to $4,500 a month. That extra $500 goes a long way ifyou also add on other sources of income out there. Using the same startingscenario of $6,000 a month gross and we raise that to $8,000 a month and keepthe cost at 25%, that would be $2,000 in cost making your gross net $6,000 amonth. Now I think at this rate you will be making a decent profit every month.

This was achieved by raising your service rates increasingthe number of service accounts, adding or subtracting certain services andcutting your overall cost of operations. You can make a profit in business, youjust need to fine tune your operations and check each month if there issomething you can do to maximize your profits. If you never sit down andcalculate if you are making money or not in your business, this could be a realproblem for you. You might be better off working for someone and taking home a regularpaycheck.