Keep Your Pest Control Company Expenses in Check

Set up your accounting system and have a process (such as employee expense reporting) for collecting pest control company expense information. This will help you tell how much money your business is spending. Identify reasons for large increases and decreases in spending and note whether or not those reasons are justified.

The difficult part is making adjustments to your company’s spending habits when needed. Many small business owners think they can outsell their expenses. Yet, there are some pest control company expenses that have a tendency to spiral out of control on you. So, you have to keep the screws on tight. As your business grows in size, many of these expense numbers can tend to get rather large.

A Penny Saved Is a Penny Earned

Monitor your spending no matter how good sales are. As your business grows, it becomes more important to monitor and pull in the reins. Some ways to keep your pest control company expenses in check are by collecting expense reports from all employees who incur expenses and watching activity on corporate cards. Make sure expense items are entered into your accounting system and monitored periodically and when credit card statements come in, take a look at each transaction and make note of unfamiliar vendors or expense areas that look a bit high.

Pest Control Company Expenses: Present vs. Past

Compare your pest control company expenses for a current period versus a prior period and note any differences. It is useful to do this for year-to-year and also month-to-month comparisons. This will quickly point out whether your business is improving or getting worse.

“The measure of success is not whether you have a tough problem to deal with, but whether it’s the same problem you had last year.” —John Foster Dulles

First off, if you’re not familiar with the terms, here’s some basic accounting lingo regarding accounting periods. For this example, let’s assume that today’s date is June 15, 2018.

  • Year-to-Date
    • Includes all business activity from Jan. 1, 2018 to June 15, 2018.
  • Month-to-Date
    • Includes all business activity from June 1, 2018 to June 15, 2018.
  • Fiscal Year
    • The 12-month period that a business uses to define a full year of activity for accounting purposes.
  • Calendar Year
    • The one-year period beginning Jan. 1 and ending Dec. 31.

You can tell an awful lot by looking at where you are on a year-to-date basis and comparing that number to where you were last year at the same date. Another good comparison is where you are on a month-to-date basis compared to the same month-to-date period of the prior year. Comparing the current year to prior years gives you a big-picture understanding of your long-term trends and helps you plan down the road. Of course, both of these are comparisons and insightful when looking at full years and full months, as well. But be careful not to confuse the month-to-month comparison as this month to last month (e.g., June 2018 to May 2018). Since the pest control business is seasonal, this comparison won’t tell you much. The comparison we are referring to is June 2018 to June 2017.

Pest Control Company Expenses: Industry Standards

Compare your financial results against industry standards. It’s always nice to know how you are doing when compared to the crowd. For instance, knowing how much the average PMP spends on labor will allow you to see how you stack up against the industry. Doing such comparisons throughout your Profit and Loss Statement will help you to recognize areas that may be mismanaged in your business. On the flip side, you may also spot areas where you are not spending enough and can afford to do so.

Getting ahold of industry financial standards is not easy in the pest control industry. What makes it tough in this industry is that there are so many privately owned businesses, so there’s no overseeing organization like the SEC to standardize and monitor financial statements. Unfortunately, this means there is not much financial data about other companies to reference for your purposes here. But that’s not to say that the information cannot be gathered.

One of the great benefits of working with PCO Bookkeepers is that all clients use the same chart of accounts, allowing us to generate monthly benchmarking reports comparing apples to apples. The comparisons are both meaningful and valuable. Now you can see how you compare to the crowd. This will enable you to see which areas your business excels in, as well as in which areas your business needs improvement in. Going through this exercise is a valuable and eye-opening experience.

To learn more about our monthly benchmarking reports or how to get your pest control company expenses under control, contact us for more information.

Dan Gordon
Dan brings over 20 years of experience in accounting and managing high growth Pest Management Companies. As an owner, manager, chief financial officer and industry consultant, he has been involved with the development of several Pest Management Companies from inception to well over 100 employees and beyond. > View posts by Dan

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