3 Ways to Create More Profit In Your Business Without More Complexity

Hi there! Thanks for stopping by. I’m on a mission to help small business owners become numbers confident, leverage debt, maximize cash flow, and pay themselves competitively. Please follow me If you’d like to learn more, and don’t forget to check out my Profit Accelerator Resources at the end.

Making the Complex Become Simple:

When I first started my coaching business, my program was called “Financial Mastery.”? My coach kindly told me that entrepreneurs want to be millionaires, not financial masters.? This was a big “aha” moment that enabled me to break down the steps to financial freedom without sounding like an Accountant or CFO.? Nobody wants the financial reports or fancy dashboards, per se.? What they want is what financial success offers: more freedom; more time; better health; or a profitable exit.? If you don’t know where to start, I wrote this post with you in mind ??.

1. Know Your Numbers and Hire a Professional Bookkeeper

Most business owners do a great job tracking their revenue, but things begin to break down after that.? You may not know which financial reports to review, and even if you do, what numbers and ratios should you focus on?? ?

The concept here is simple: There is a direct correlation between how well you know your numbers and the financial success of your business. You love delivering your product and/or service.? Stay in your zone of genius and seek help on the finance side of the house.

??PRO TIP: Hire a professional bookkeeper. If you’ve followed me for any length of time, you know this is table stakes.? You might have to fire (or repurpose) your current bookkeeper, which is likely you, a close relative, or an office administrator who was never professionally trained in bookkeeping.?

??Hint: How can you know your numbers without having timely and accurate data? A bookkeeper will get you there so you can get to where you want to go!

? Once you’ve checked this off your list, you are ready to move on to the next step.

?2.?? Know Which Reports You Should Regularly Review on Your Dashboard

Knowing what to look at is not the same as understanding what you are looking at.? For example, have you ever been to the doctor when they showed you an x-ray and pointed out a blurry gray area against a black backdrop, expecting you to see what they see?? Sure, you see an X-ray, but you don’t know what the X-ray reveals without a trained eye.? Your financial health is similar to your physical health. Here are the three main reports (numbers) you should add to your monthly dashboard.

Profit & Loss as a Percentage of Revenue: If you are like most business owners, you look at dollars and not percentages or margins.? Numbers need context.? Once you start looking at your P&L in this format, you’ll start to better understand and analyze things like your Cost of Goods Sold, Gross Profit Margin, Net Profit Margin, and largest expenses as a percentage of revenue.? For example, you can benchmark payroll to not exceed 30% of revenue. Why use an internal report that may not be accurate, when your accounting data is right in front of you?

Balance Sheet: Most business owners don’t look at their balance sheet and this is a big mistake because the balance sheet reveals critical information about the health of your company.? If your balance sheet is out of balance, go back to my first point about bookkeepers.? The Balance Sheet can tell you how much capital you need to fund growth, how to leverage debt to grow your business responsibly, and how to forecast your cash flow for the next 90+ days.

Budget/Forecast Variance Report: Most business owners do not build out a 12-month forecast.? I get it, who wants to get bogged down with complicated spreadsheets or mind-numbing details? However, this is also a big mistake because monitoring your actual results against your plan is critical to achieving your goals.

Did you know you can build your 12-month forecast using your existing accounting software and historical data in 5 minutes?? Check out my 5-Minute Forecast video HERE.? I will walk you through how to do this in 5 minutes.? Then you may only have to spend an hour or so tweaking the numbers to establish your annual forecast.? Lastly, you can import this information into your accounting software (I use Live Plan for my clients), and then each month you can run a Budget Variance Report which shows your actual results versus your plan. I advocate, “Monitor Monthly, adjust Quarterly.”?

??PRO TIP: Commit to running these reports every month.? You should have your previous month’s books closed out by the 10th of the new month, including bank and credit card reconciliations.? Another Table Stakes item!

?? Hint: You won’t become Warren Buffett in five minutes, but if you do this every month, you’ll have a firm grasp on your numbers as “repetition breeds familiarity.”? Within 12 months or less, you’ll be able to do this in about 15 minutes per month.

3.?? You Might Need a Sherpa Guide

Even the world’s best climbers hire a guide when climbing Mt. Everest.? Most accountants and bookkeepers have the knowledge to help you, but not always the time or temperament.? This is not a knock on their profession.? Rather, I work very closely with my client’s bookkeeper and/or accountant.? It’s just that I find most accounting professionals are very technical and focus on implementing not teaching.? I’m a teacher and coach and that’s why I developed my programs around helping small business owners become numbers confident, maximize cash flow, leverage debt, and pay themselves competitively. ?This is not to say that your accountant and/or bookkeeper isn’t doing a great job.? I will be the first one to celebrate with you if you want to hire them as your coach, and you get great results. I’m just focusing on those business owners who are not getting that level of service and resonate with my expertise, jive with my unique personality, and appreciate my straightforward style.? I’m not a fit for everyone, and that’s ok too. ?

??PRO TIP: I believe in the “teach a person to fish” model.? You can learn how to run the business side of your business without having to be dependent upon someone else. My clients learn the basics in 30-90 days. ?

One Last Thought

I spent 30 years in corporate banking before launching my business financial coaching practice four years ago.? I am an eyewitness to seeing the great results my clients achieve when they implement these strategies.? In corporate, we used to celebrate our wins and our team's success, almost forgetting that there was a client involved.? As a solopreneur, it’s all about helping my clients win and celebrating them (not me).? It’s addictive and I want to help more small business owners break the cycle of being the least or the last to get paid in their business.? I’m not saying it’s easy, but you don’t have to risk your life climbing Mt. Everest either!

Profit Accelerator Resources: Whenever you are ready, here are three ways I can help you:

1. Financial Dashboard for Making Profitable Decisions This 30-day 1:1 workshop helps you become numbers confident and conversationally competent around the numbers in your business.?We work together to build your 12-month financial forecast, so you have a solid plan for improved profitability.
2. Business Plan Workshop If you are looking to obtain funding from a bank or investors, a well-written business plan and pitch are critical for success.?It’s a 1:1 workshop over 3-4 meetings and you’ll walk away with a professionally prepared business plan to help you raise the capital you need to grow your business.
3. Profit Finder Program I can help you uncover an additional $25K-$75K profit in 30 days or less. I have a knack for finding hidden profit locked inside your business. It may take between 3-12 months to achieve the profit lift, but you’ll have a clear-cut plan and strategy.

Remember, business growth is a series of consistent small steps, not giant leaps. If your compensation is well below what you could earn in the open market, it’s time to have a conversation and see how you can run a great business AND pay yourself competitively.

?

?

?