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LUTZ BUSINESS INSIGHTS
5 tips for creating effective estimates
jimmy burgess, senior accountant
Estimates aren’t just for car repair shops or HVAC technicians. You may want to present them to customers if your company does projects that:
- Don’t have firm price tags
- Consist of multiple parts, like hourly work and materials
- Are likely to be expensive
You can create estimates in Microsoft Word or in accounting software like QuickBooks. The latter is preferable for many reasons. For one thing, you already have customer, product, and service information stored there. You can also convert estimates to invoices in one click. Whichever method you choose, you’ll be more likely to have your estimate approved if you adhere to a few guidelines.
Create a checklist for yourself ahead of time.
Don’t just fill out an estimate form. Go over each step of the project in writing first. You undoubtedly have price lists for hourly work and supplies, but there may be additional charges. If multiple people will be contributing, you’ll need to build a timeline so you can promise a realistic delivery date.
“Precise estimate” may sound like an oxymoron. After all, you’re not absolutely certain what the final total will be. But spell out every element of the project with hour/cost totals. Be sure you include things like setup, corrections, and color/part changes.
Build-in early notifications of cost overruns.
Track costs carefully as you go. If you get partway through the project and realize that expenses are growing beyond the estimate, notify the customer before proceeding. You could specify a percentage (i.e., early warning if costs exceed a 5 percent increase).
This guarantee should be spelled out in your estimate. It will ease some of the apprehension your customer might have about approving the expenditure.
Make your estimate visually appealing.
Handwritten thank-you notes can be appropriate in some business situations, but not handwritten estimates. Paper and electronic forms you send to customers should be polished and professional-looking
QuickBooks allows you to customize your estimates. You can insert your company’s logo, add or remove fields (even inserting a Due Date field), and modify the design (fonts, colors, etc.).
Build-in a follow-up date.
The process of having an estimate accepted may require multiple interactions with the customer. Don’t just send it and hope for the best. You might personalize the actual form with a handwritten note if you’re snail-mailing it or an additional email if you send it electronically. Tell the recipient to expect a call or visit by a specific date to discuss your proposal. You could consider adding a modest discount if an estimate is accepted by a certain date.
These suggestions may seem like overkill if you’re simply proposing to build a website or do a minor car repair. But the more complex the project, the more effort you should put into your estimate.
ABOUT THE AUTHOR
JIMMY BURGESS + SENIOR ACCOUNTANT
Jimmy Burgess is a Senior Accountant at Lutz with over four years of relevant experience. His primary focus is to provide outsourced accounting to clients with a focus on QuickBooks, tax and payroll compliance, small business consulting, as well as software implementation training.
AREAS OF FOCUS
- Outsourced Accounting Services
- Tax & Payroll Compliance
- Small Business Consulting
- Software Implementation & Training
- Construction Industry
AFFILIATIONS AND CREDENTIALS
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BS in Business Administration and Accounting, University of Wyoming, Laramie, WY
- Youth Sports Coach, Volunteer
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