An estimate is a calculation of the value of a financial transaction where an exact value cannot be provided to the client in the context of preparing a financial statement and is based on a combination of judgment, prior knowledge, and experience. Estimates are generally used when a client may want to know the general price for the products or services you are offering. On the other hand, estimates are an effective method of determining a more realistic price if you as a small business owner are unsure of the extent of the work that has to be done. In this article, we will discuss the 3 common estimating mistakes your small business might be making.
1. Materials & Supplies Costs
The total cost of materials and supplies used for a specific project may be really hard to determine in advance, as the price of materials and supplies may vary drastically from the time you issue an estimate until the start of the project. Due to the economic impact of the Covid-19 pandemic, the price of materials and supplies fluctuates drastically even on a daily basis, especially materials and supplies in the construction business such as steel. Another thing to factor in is the rising prices of solid fuels and electricity. Demand for materials and supplies is high, and uncertainty about import tariffs and their effect on prices make it even more challenging to make accurate estimates.
2. SEO Practices
One of the major factors for a small business is building its online presence. To do so, you need to analyze keywords, build a website that is user-friendly, have a cool web design, and simply keep adding amazing content and advertise it on social media. Building a website is a tiresome job and it takes time. SEO for small businesses has become a branch of its own and if you don’t know what you are doing, we suggest that you find someone who does. SEO can make or break your company.
3. Not utilizing past experiences
An integral part of estimating is keeping track of prior project data. By comparing your current project to a similar project from the past, you can not only avoid making the same estimating mistakes, but also the mistakes you already made while executing the project itself. By analyzing and utilizing your past experiences you can be more than confident that your estimates are as accurate as possible, and with that ensure that the execution of the project is done with precision and efficiency.
Always be on top of your current and past project expenses when giving an estimate. Always compare your current project to a similar project from the past, as you will avoid making the same estimating mistakes twice. Project costs and expenses such as labor costs and materials and supplies costs should be estimated based on the most current data available, past performances, and models. The total cost of materials and supplies used for a specific project may be really hard to determine in advance, as the price of materials and supplies may vary drastically from the time you issue an estimate until the start of the project, so always estimate prices that are at least five percent higher than the current.