Your accountant is brilliant. They're organized, professional, they file your taxes, and they probably tell you that you made a profit last year. But here's the problem: they tell you in April what you did in December. By the time you know if you were profitable, you've already spent the money.
You don't need an accountant to tell you if you're profitable. You need real-time visibility into your margins. And you don't need fancy software or a degree in accounting. You need a spreadsheet.
This post walks you through building one. It's simple, it's free (or costs a fiver if you want a fancy version), and it will tell you more about your business than your accountant tells you all year. Best part? You'll know within 48 hours of finishing a job whether you actually made money on it.
Why Your Accountant Doesn't Know If You're Profitable
This isn't your accountant's fault. Their job is to record what happened and file tax returns. They're brilliant at that. But they're working with historical data, and they're often looking at gross profit (revenue minus direct costs), not net profit (revenue minus all costs, including overheads).
So when your accountant says "You did £80,000 revenue last year," they might mean: after material costs, labour, and direct job costs, you had £24,000 left. That sounds great. But they don't usually tell you that your rent, insurance, vehicles, software, and admin time cost you £18,000 a year. Which means your actual profit was £6,000. Barely £500 a month.
And you won't know that for another three months, after your accountant files your tax return.
By that time, you've already made decisions based on false information. You've maybe hired an extra person. You've committed to a lease on a new yard. You've bought new tools. All based on thinking you're more profitable than you actually are.
The Two-Tab Spreadsheet That Changes Everything
You only need two tabs. I'm serious. Two tabs. One for overheads, one for jobs.
Tab 1: Overheads
This is everything that costs money whether you do one job or a hundred. Rent, insurance, vehicle costs, software, phone, tools, office admin time, marketing. Everything.
Here's an example for a one-person electrician:
| Overhead Item | Monthly Cost |
|---|---|
| Rent (home office) | £300 |
| Insurance (tools, van, liability) | £400 |
| Van (lease, fuel, maintenance) | £800 |
| Phone, software, subscriptions | £150 |
| Tools and equipment | £200 |
| Total Monthly Overheads | £1,850 |
That's it. Every overhead for the business. Total: £1,850 a month, or £22,200 a year. This number is crucial. Keep it updated. Review it quarterly.
Tab 2: Jobs
Every job gets a line. You don't need to wait until the end of the month. The moment you finish a job and invoice it (or get paid), you add it to this sheet.
| Job Name | Sale Price | Materials | Labour Hours | Labour Cost | Subcontractors | Total Cost | Margin % |
|---|---|---|---|---|---|---|---|
| Smith - Kitchen Rewire | £2,000 | £400 | 15 | £675 | £0 | £1,075 | 46% |
| Brown - Bathroom Outlets | £800 | £120 | 6 | £270 | £0 | £390 | 51% |
| Jones - Emergency Callout | £350 | £80 | 2 | £90 | £0 | £170 | 51% |
| Davis - Garden Shed Lighting | £600 | £200 | 8 | £360 | £0 | £560 | 7% |
Look at that last job. Garden Shed Lighting. 7% margin. You'd have immediately known not to quote that price if you'd calculated it first. But let's assume you won at that price. Now you can see exactly what it cost you.
The Margin % column is calculated with:
That's your net margin on the job, before considering overheads.
Understanding Your True Profit
Now here's where it gets interesting. Let's say at the end of a month, you've done four jobs (the ones above), totalling £3,750 in sales and £2,195 in costs. Your gross profit is £1,555.
But your overheads for that month are £1,850. So your net profit is:
You've made a loss. Even though three of your four jobs were profitable (46%, 51%, 51%), the one dud job (7%) and your overall overheads meant you lost money that month.
This is the number that matters. Not revenue. Not gross profit. Net profit. And you can see it every single day, without waiting for your accountant.
Real Example: An Electrician's Month
Let's work through a full month for the electrician above. They've got £1,850 in monthly overheads. They want to make a decent profit, so let's say they target £500 net profit a month (£6,000 a year above overheads).
That means they need to generate £2,350 in gross profit (£1,850 overheads + £500 profit target).
If their average job margin is 40%, they need:
They need to do roughly £5,875 in work a month to hit their target. Let's say they do 12 jobs at an average of £500 each. That's £6,000 in sales.
| Metric | Value |
|---|---|
| Total Sales (12 jobs) | £6,000 |
| Average Job Margin | 40% |
| Gross Profit | £2,400 |
| Less: Monthly Overheads | £1,850 |
| Net Profit | £550 |
Perfect. They've hit their target. They know exactly what they need to earn to achieve it. No mystery.
But here's the power: if one month they only do 10 jobs instead of 12, they immediately see the impact:
| Metric | Value |
|---|---|
| Total Sales (10 jobs) | £5,000 |
| Average Job Margin | 40% |
| Gross Profit | £2,000 |
| Less: Monthly Overheads | £1,850 |
| Net Profit | £150 |
They've gone from £550 profit to £150 profit. They know exactly why (fewer jobs) and they can take action immediately (either pick up more work, lower overheads, or raise margins).
Building Your Spreadsheet: The Steps
Step 1: List your overheads. Be thorough. Every subscription, every insurance payment, every vehicle cost. Get your last three months of bank statements and categorize everything that isn't a direct job cost.
Step 2: Calculate your monthly overhead total. This is line one of your job sheet. You need to know how much money has to leave your account every month just to keep the doors open.
Step 3: Create your job tracker. Add columns for: Job Name, Sale Price, Materials, Labour Hours, Labour Cost, Subcontractors, Total Cost, Margin %.
Step 4: After every job, add it to the sheet. Don't wait until the end of the month. The moment you finish and invoice, log it. This is your real-time profit and loss statement.
Step 5: Calculate your net profit at the end of each week. Total sales minus total costs minus overheads. That's your profit for the week. Do this every Friday, and you'll never be blindsided again.
Making It Even Simpler: A Template
We mentioned a downloadable template earlier. A proper absorption costing spreadsheet template is coming soon to FindMyBuyer — you'll be able to download it and populate it with your own numbers in five minutes. It'll auto-calculate your margins, your weekly profit, your monthly targets, everything.
For now, you can build this yourself in Excel, Google Sheets, or even paper and pen if you're old school. The format doesn't matter. The discipline does.
Why This Matters More Than Your Accountant
Your accountant makes sure you don't go to jail. Your spreadsheet makes sure you don't go broke. One is important. The other is vital.
With this spreadsheet, you'll know:
1. Exactly how much profit you need to make per job. If your overheads are £1,850 a month, and you do 10 jobs a month, you need £185 of profit per job minimum. That tells you immediately which jobs are worth your time.
2. Your break-even point. How many jobs do you need to do each month just to break even? Once you know that, everything else is bonus.
3. Where your money's going. If you're not hitting profit targets, is it because sales are down, or because margins are slipping? Your spreadsheet shows you immediately.
4. When you can afford to hire.lol You can see exactly how many more jobs you'd need to generate to cover a new employee's cost. That's real workforce planning.
5. Whether you're actually profitable. Not "according to the accountant" profitable. Actually profitable, in real time, right now.
Your action step: This week, create your overhead list. Grab your last three months of bank statements and categorize everything. Write down your monthly overheads. Then create a simple job tracker and add your last five jobs to it. Calculate the margins. See where you stand.
What's Next?
Now that you understand how to calculate your true costs, you need to understand the difference between markup and margin. Many small business owners confuse the two — and it's costing them thousands. Read our post on markup vs margin to make sure you're not making that mistake.
You should also review how one business went from losing £80k to profiting £80k by implementing these exact principles.
The bottom line: stop waiting for your accountant to tell you if you're profitable. Build a spreadsheet. Know every day. Take action every week. That's how you stop being busy and start being profitable.