The value of a company is calculated in many ways, however, if the resources used to create the service or product fail to generate a reasonable surplus then the business is underperforming.
The key reason has been determined as a lack of financial understanding. For example, working in Social Care it is simple to settle for the offered hourly rate. This can range from £14.95 up to £24 an hour on Public sector contracts.
The team are asked to help develop a sustainable income plan, the first review indicates the hourly rate is set on what competitors charge for a basic service.
The failure to calculate the core costs and then establish the variables in service cost often creates funding or income pressure. If Complex Care costs £1 an hour more than Home Care what are the extra costs? Asking simple questions can create a ripple effect, once the true costs are calculated the ease of pricing new work and the confidence created makes selling services easier.
Outcome Focused Finance
It is a simple tool and it generates great results, so if you think about how can we make more money doing what we do. Begin by understanding what you charge for.
This post is an introduction and of course tests the number of people interested in creating sustainable income.