Many people have complained about the worker shortages this year. If you need additional workers in order to grow your business, here are some ideas for your consideration.

Where to Look for Workers

We may think of workers as only being employees, but there are a lot more options if you’re open-minded.  Here’s a list of places to find workers of all kinds:

• Recruiters
• Employment agencies
• Online job portals, such as Indeed, SimplyHired, and ZipRecruiter.
• Social media, including LinkedIn Jobs
• Your own website, email list, or employee referrals
• Temp agencies
• Specialized online job portals that cater to your industry and business type
• Virtual assistant organizations
• Day labor online sites and pickup areas
• Job matching sites such as Upwork, Fiverr, and Freelancer.
• Colleges, when you need interns and entry-level workers
• Your local unemployment office
• Small business development centers
• Virtual assistant agencies or businesses
• Chambers of Commerce and other business organizations
• Professional organization directories where a license is needed, such as hair stylists, dentists, or CPAs
• Friends, colleagues, competitors, and neighbors; your own personal or business network
• Craigslist and local classified ads
• High school guidance counselors if you want to hire straight out of high school
• Outsourcing to a company that provides the labor that does what you need
• Volunteer matching sites

Options for Adding Workers/Labor

There are many ways you can increase labor in your business. The obvious is hiring employees.  Beyond employees, there are many more options than you might first think:

• Contractors, where you have a contract for a particular job and meet all of the IRS and other compliance requirements
• Temp workers, where you “lease” an employee who stays on the temp agency payroll or hire them outright with a limited term of employment.
• Part-time workers on your payroll
• Companies that you outsource the work to and contract with as vendors to provide a particular service. They may outsource your labor needs or simply have labor as a component of the product or service you have contracted them to supply.
• PEO, or professional employer organizations, act as a client’s employer and hire their employees as well as manage payroll and other HR compliance tasks.
• Interns, which are unpaid positions. Check your state and local rules for laws regarding hiring interns.
• Volunteers.  This is common if you have a nonprofit organization.

With all of these options available, it should be a bit easier to find ways to add labor and grow your business.

If you’re a business owner who wants to continually find ways to increase your profitability, then you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable volume of sales for your business.

Direct Expenses

Expenses that fall into the direct cost category are ones that relate directly to the items you sell. Here are some examples.

• If you have a flower shop, the cost of the flowers is a direct cost. So is the cost of vases, ribbons, cards, and the labor to put the arrangements together.
• If you are a law firm, the labor and any materials or supplies spent on serving a client is a direct cost.
• If you own a pool building company, the costs of the concrete, tiles, filter, pump, and labor to build the pool are direct costs.
• If you run a toy store, the purchase of the toys is a direct cost.

Direct expenses, unlike indirect expenses, will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.

In general, direct expenses should be recorded in Cost of Goods Sold. You can get your Gross Profit figure by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an important percentage to know in your business. It is computed as follows: (Sales – COGS) / Sales.

Some small service companies might not bother to break out labor into direct and indirect on the Profit and Loss statement each month, but it can be useful to break out periodically or when you are re-evaluating your pricing and profitability.

Direct expenses are important in making pricing decisions, but so are indirect expenses.

Indirect Expenses

Indirect expenses are expenses that you need to incur to run your business, but are not directly related to the items you sell.  Here are some examples:

• Telephone
• Rent
• Insurance
• Utilities such as electricity, gas, water, and garbage pickup
• Administrative labor, such as a receptionist or supervisor
• Education and training
• Professional services, such as legal, HR, IT, or accounting
• Office supplies
• Hardware and software
• Business permits

Fixed and Variable Costs

Direct and indirect costs can each be further broken down into fixed and variable costs. For example, HR expenses, education, and training will go up as you sell more and hire more workers. That makes them variable costs.

Other indirect expenses will remain flat no matter what your sales volume is, such as rent. That means they are fixed costs.

Pricing Your Items

When calculating your sales prices, use direct costs to be sure your profit margin is high enough to cover an allocation of your indirect expenses.  In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering the volume of your sales.

The lower your sales volume, the higher the price per item should be. A higher sales volume gives you more room to spread out your indirect costs over more sales. That leads to either higher profits, or you can lower your price to be more competitive.

If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out any time.

You may already be doing your part to help save the planet. From recycling to driving electric cars, to avoiding the use of plastic bottles and carrying reusable bags to the grocery store, there are myriad ways for all of us to make a difference—both big and small. However, it may be important to stop and ask ourselves: Are we currently doing enough?   

If you have considered pursuing an even more sustainable lifestyle, guess what? There’s an app for that! Actually, there are a few different apps to help you accomplish the goal of tracking your carbon footprint. In doing so, you can physically see your carbon environmental impact.

Below, we have detailed some of these apps and their benefits. Take a look! If you have any questions, please don’t hesitate to reach out.

Capture

Capture is an app that calculates users’ monthly CO2 targets by asking a series of questions. These questions include things like, “How many flights a year do you take?” and “What kind of diet do you adhere to?” Capture also utilizes GPS tracking to predict emissions from transportation.

Specifically, the app was designed to not only make planet-friendly living possible, but also make the process easy—or, easier—for those interested. With the capture app, users can conveniently “track, reduce, and remove CO2 emissions from everyday life.”

Interestingly, the app can be used single-handedly or with colleagues. If you are a numbers person who likes measuring and tracking, Capture is for you.

Almond

UK-based, Almond’s mission is simple: to help as many people reach Net Zero carbon emissions as possible, and in just four easy steps:

1. Understand your carbon footprint
2. Discover responsible brands
3. Earn offset coins when you make a switch
4. Offset your carbon footprint

Almond allows you to scan products to not only learn about that particular item’s story but also see what’s in the product (i.e., if it’s environmentally-friendly). Then, you can earn money with crypto rewards to plant and protect trees, which offset your carbon footprint. The more you earn, the faster you can grow your forest to achieve a carbon-balanced lifestyle and reach your personal CO2 Net Zero.

Pawprint

Pawprint allows individuals to fight climate change in the palm of their hands. This online tool helps to measure, understand, and reduce your carbon footprint.

Known as the “Eco companion,” this app delivers the following:

• Science-based data you can trust
• Carbon-reducing tips and challenges that suit your particular lifestyle
• Better insight into how your carbon footprint measures up to the rest of the UK (this app is also UK-based)

One factor that sets Pawprint apart from other carbon footprint tracking apps, is that all of its data is validated by Mike Berners-Lee’s Small World Consulting, an expert in the industry.

Of course, there are plenty of other smartphone apps and tools available to help you better track and reduce your carbon footprint, including The Extra Mile, My Planet, and Carbon Footprint. The trick is to find the app or tool that works best for you and your lifestyle.

While we all have to keep our monthly books up to date for tax and other compliance reporting purposes, we should never stop there. Your books hold a wealth of information that you can use to run your business better.  Here are five reports you should never be without.

Budget-to-Actual Profit and Loss Statement

Hopefully, you’ve already seen how powerful the Profit and Loss Statement is. Let’s take it a deeper level and add budget comparison to it.  With this addition, you can plan your way toward the sales and profit figures you want. You’ll know every month whether you’re on track, ahead of the game (give yourself five stars!), or need to hustle to make it up next month.

Most accounting systems allow you to enter monthly budget numbers for your sales and expense accounts.  You can enter them at the beginning of each year and adjust them throughout the year. It’s kind of like having Google Maps on a cross-country journey. You will be able to see where there is construction and traffic, so you can take another route. You can also see where there are cool places to stop, so you can take advantage of the fun. Your numbers tell a story.

Actual-to-Prior-Year Profit and Loss Statement

This is an easy report to generate, assuming you have at least two years’ worth of information in your accounting system. This report allows you to compare your business’s results for this year with how you did last year.  Are you ahead? Behind? Have new products and services? New employees?  New expenses?

With this comparison, you can take action based on how you would like your business to perform this year versus last year. While this report is readily available, few businesses study it to glean the insights available, so be sure to spend some time analyzing the data in this report.

Sales by Item, Customer, or Division (or All Three)

Inside every business’s sales information is a treasure trove of possibility. Where are you seeing growth, and how can you capitalize on it? Where do you see a slowdown, and can you run a promotion to juice things up?

Choose the breakout – customer, item, division, or another – that is meaningful to your business type. If possible, arrange for a searchable database so you can drill down into the detail even more. What trends do you see?  What opportunities do you see?

Operations Reports   

To find out more about your profitability and to get into the details of how your expenses are matching up with your sales, you need to review your operational accounting reports. The exact report will depend on the type of your business.  If you are in services, you’ll need payroll reports and time sheets. If you are in retail, you’ll need inventory reports. If you are in construction, you’ll need job cost reports. And if you are in manufacturing, you’ll need cost of goods sold and other reports to evaluate assembly and production efficiency.

Cash Reports

The last report that is essential for good business management is all about cash. There is more than one option here, and these reports can include Accounts Receivable Aging, Accounts Payable Aging, cash flow forecasting, and various cash flow reports.

If you grant customers credit, you’ll want to actively make sure that money is collected on time from clients. If customer balances get too old, action must be taken. Even if you don’t grant credit, transactions such as returns, expired credit cards, and bounced checks need special attention.

The same is true for amounts you owe to vendors, with the Accounts Payable Aging report.

If you run tight with your cash balance, you may want to have a cash flow forecasting report on hand. This report gives you good warning as to when your bank balance may dip below your needs.  You can then delay vendor payments or find an infusion of cash to cover the shortfall.

With these five categories of reports, you will have dozens of opportunities to be proactive about running your business and improving your results.  And if we can help you find or generate them, please reach out anytime.