Why Overall Profit Isn't Enough as Your Business Grows
When a business is starting out, tracking overall profitability is relatively simple. With only a few projects, one service offering, and a small team, the numbers are easy to monitor. As the business grows, however, overall profit stops giving you the full picture and you need to start tracking different units within the business.
These units might be individual service offerings, specific projects, or even particular client groups. Breaking profitability down at this level allows you to make stronger decisions, focusing more on what's working and identifying areas that need improvement. Sometimes a service simply isn't profitable and isn't suited to your business, which means it may be better to move away from it entirely.
To track profitability at this level, you need visibility over the costs that sit behind each unit. This includes the time employees and contractors spend on each service or project, along with the operating costs involved in delivering it. Without that level of detail, it's almost impossible to know where to concentrate, where to improve, and where to scale back.
