Everyone wants to succeed in business and while success can include a range of factors, in the end it all comes down to whether or not your business makes a profit. The fact is, every business owner wants to boost their profits to create a more valuable business and to enjoy the personal prosperity that profits bring for the owners.
Read on for the THREE profit boosters that are lurking in your business and what you should do to harness them.
#1: Get acquainted with your P&L and Balance Sheet
Business owners who regularly review their Profit & Loss and Balance Sheet are able to find financial indicators that could cause profit limiting problems, as well as trends for capitalising on opportunities for increasing income and/or reducing costs.
Of course, if your financial systems aren’t up to muster or your data input is dodgy, you can’t expect access to the type of reliable financial information that will enable you to manage your business effectively.
In my experience, the business owners who review their Profit & Loss and Balance Sheet regularly have the most profitable businesses and enjoy more personal and financial success.
Knowing your numbers and getting closely acquainted with your P&L and Balance Sheet is key to boosting your profit.
#2: Better to aim high and miss, than to aim low and hit your target with precision!
When you have a sound grip on your financials, you’ll have confidence to make decisions and take action.
The problem with sloppy financials is that business owners never feel sure about what lies ahead. Is it any wonder they flip flop when making decisions? They worry they’ll be jumping from the pan into the fire.
With the support of strong financial data (and the wisdom of an experienced accountant and business advisor) you’ll feel equipped to make the tough decisions and lead the change your business needs to be more profitable.
The easiest actions to implement start with being honest with yourself.
Are the products and services you’ve traditionally sold or manufactured still relevant? Are you holding on to services for fear of losing a few loyal customers or are there sentimental reasons for keeping slow selling products?
Changes in demand and escalation in production costs, poor customer service or inefficient and poorly trained staff are just some of the problems that may be lurking in your business and eroding your profit. Business owners need to look for these problems and take action.
When you know your break-even you can set a profit benchmark AND make a plan.
Get your team on board (including your accountant) to review your operations, implement changes and create a culture of business success by encouraging and rewarding your people for getting a job done faster and more accurately, for innovating and delivering great customer service.
Then once you’ve developed a review process, ensure you implement it regularly. This will enable you to reset your profit goals without being afraid to up-the-ante by continually striving to improve your last best effort.
It’s better to aim high and miss than to aim low and hit that target with precision!
#3 Take care of the cents and the dollars take care of themselves
For most businesses, it’s the small and easy fixes that can make a remarkably big difference to their profit boosting ability.
Improving productivity could be as easy as organising a staff training session; Updating a piece of equipment to enhance efficiencies; and keeping tabs on trends and what your competitors are doing can be as easy as visiting their websites or following them on social media.
Importantly, when you take care of the cents, the dollars take care of themselves and this is often as rudimentary as ensuring your invoices go out on time and you chase late payers.
It’s also important to check your bills and regularly review your suppliers and compare their prices so you get the best deals and service. There’s no point signing up for cheap prices if your goods don’t turn up when you need them.
In my experience, most businesses have a dozen or so small matters that, once addressed, could lead to significant additional profit.
Once you start looking, you’ll find more and more profit opportunities that can be improved or implemented.
But rather than becoming overwhelmed, make a list and accept that you’ll always be adding to the list, because successful businesses are the result of continuous improvement.
If I can help you to boost profit so that you may succeed in business and enjoy personal prosperity, please contact me on +61 2 9699 9171 or email email@example.com
This information (including taxation) is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Make Cents Accounting strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.