FREQUENTLY ASKED QUESTIONS
They have industry and expert advice to share with you. They want you to succeed and can help you through the tough times. They have solutions that you haven’t yet thought of. They will find out or see through your numbers anyways so full disclosure is the best policy.
Overhead costs refer to those expenses associated with running a business that can’t be linked to creating or producing a product or service. They do not directly generate profits, but are still vital to business operations as they provide critical support for the business to carry out profit making activities. A proper budget in place allows you to plan for these expenses. It provides you with a basic understanding of what you need to sell in order to be profitable. Budgets can also help you plan for cash flow shortages.
Lender’s like to know that their money is being used for it’s intended purpose. You can control your cash flow better and isolate project shortfalls when they occur. You protect yourself from utilizing allocated project cash flow for alternate overhead or capital purchases.
Hire a professional with experience in your industry. Hire someone who can tell the story behind your numbers, not just produce them. Hire someone who is profit motivated and will protect the performance of your company. Hire someone who values the importance of future forecasting vs historical reporting. Hire someone who does not work in isolation and makes a point of getting involved with your sales team and operations team. Hire someone who will put internal controls in place to protect your bottom line and eliminate your business risk.
The word “profit” has been given a bad rap lately as our business visions have become more “touchy feely”. I am on a mission to bring back profit into the workplace using a holistic approach. By that, I mean the process of driving it through all six key foundations of your business which are:
- Sales Maximization
- Operational Excellence
- Customer Satisfaction
- Employee Engagement
- Financial Discipline
- Research and Development
Your connection with who you are and why you are in business is vital to your business’s success but it needs to be balanced with your second goal of being in business to make money. By using my 3-Dimensional Profit Model as part of your strategic planning for your business, you can ensure that your business stays true to its passion and vision but achieves massive profit results at the same time. Reach out and connect with me to find out how.
You need to have your eyes and ears peeled watching both cash and profit at the same time, but if you had to choose, cash is king and is the priority of the two.
Cash represents the cash that you have on hand today. It is all of your cash accounts as well as those items that can be turned quickly into cash such as your accounts receivables, bonds, GIC’s and short term investments. The cash that you have today comes from three sources: operations, financing and investing activities. It is a dollar amount frozen in time that is easily measurable and quantifiable. You either have it or you don’t have it.
Profit is your ability to generate cash in the future and profit only flows from one of the three sources above, that being the operations of the business. Profit is the result of your business selling a product or service to a third party for a price greater than what it cost you to provide that product or service.
Note: A profit and loss statement is not the same as a cash flow statement. You need a healthy balance between both cash and profit to maintain a successful business.
Your success number is that number at the end of the day that you as an owner need to put in your pocket. It is important that you understand what this number is and that it matches your personal vision of achievement. You must also closely align your success number with reality. (SMART goals). Reverse engineering your success number through your business is an important process that your profit coach can help you with. Putting an action plan to that vision can greatly increase your chances of reaching your success number at the end of the day.
When you think about profit in your business, what comes to mind? Making more than you spend? Having money left over at the end of the day for yourself? Profit is quite simply a mathematical formula for a desired outcome. It is made up of six key components and only these six components can affect how much profit you make at the end of the day. They are as follows:
- The number of leads that come into your business
- Your ability to convert those leads into actual sales
- Your average sales price of your product/service
- The cost of you providing that product/service
- Your overhead costs to keep your business running
- And the amount of taxes that you pay the tax man.
Nothing else matters when it comes to calculating your profit. If you want to have more money at the end of the day to put back into the business or to achieve your financial freedom, then you need to make improvements in one or more of these six areas.
Everything. Whether your business is growing fast or facing a downturn in the market, it will be facing the challenge of cash flow and profitability. Taking your eye off these two facets of your business could be a game changer.
You value your time and understand the power of finding a quicker solution to your current challenge. You are tired of stressing over money and cash and would like this stress to go away. You realize that your passion does not include number crunching and would rather leave that part of your job to a professional.