The Most Common Outsourced CFO Services – Part 2

Let’s continue our conversation about the most common outsourced CFO Services that people request. This second service is near and dear to my heart, because it hits the critical point that helps any business get to the next level:

Growth – Return to, or exceed pre-pandemic levels

When business owners get together, they are always interested in bragging about their company performance. But the numbers they tout to their friends and anyone else who will listen are not the ones that they worry about in their office.??

Everyone talks about their sales. They’re up 20% or 50% from last year. But the number that they don’t crow about (but is the most important) on their Income Statement is Net Income.?

They avoid it because nobody talks about how much money they have in their wallet. And bragging about profitability is just that.??

So how do we achieve growth – I mean?real, profitable growth???If you’re going to reach and exceed pre-pandemic profitability, you must push sales that contribute to the bottom line by holding the line on gross margin, and/or managing your overhead expenses.??That’s where profitability comes from. It’s not sales. It’s squeezing expenses. Consider the following:

1. You want to increase sales without reducing prices. You need to maintain margin which contributes to bottom line growth.??Anyone can pick up sales by cutting prices.??Increased sales only matter if it increases profitability.??Sales that don’t contribute to profitability don’t count.??
2. Take an analytical view of every expense. Determine if they contribute to the bottom line, or just increases your spend:

• Did a staff addition make you more efficient?
• What is the ROI on that new marketing program???Did you receive you expected outcome?
• Did your equipment purchase increase production or efficiency? How quickly does it pay back the investment?
• With more staff working from home, did you reduce your office footprint?

When a CFO beats up your Income Statement, you might not be happy with what they find, but you’ll have answers so you can make changes today that affect profitability tomorrow.?