Management Information |
Dont Wait for Tax Time to Look at the Bottom Line
A curious thing happens to entrepreneurs in the spring of every year. They wake up one day and realize they had better figure out how much money they made last year so they can pay their taxes. But wait, shouldn't a business owner already KNOW how much money he or she made last year, last quarter, or last month? If you don't keep track of how much money you're making, you have no idea whether your business is successful or not. You can't tell how well your marketing is working. And I don't just mean you should know the amount of your total sales or gross revenue. You need to know what your net profit is. If you don't, there's no way you can know how to increase it. If you want your business to be successful, you need to make a financial plan and check it against the facts on a monthly basis, then take immediate action to correct any problems. Here are the steps you should take: Create a financial plan for your business. Estimate how much revenue you expect to bring in each month, and project what your expenses will be. If you need it, get help from business planning books, software, or an accountant. Review the plan monthly. Even if business owners take the time to prepare a financial plan with profit and loss projections, they often let it sit in a drawer. It's not enough to have a plan -- you have to review it regularly. Remember that lost profits can't be recovered. When entrepreneurs compare their projections to reality and find earnings too low or expenses too high, they often conclude, "I'll make it up later." The problem is that you really can't make it up later: every month profits are too low is a month that is gone forever. Make adjustments right away. If revenues are lower than expected, increase efforts in sales and marketing or look for ways to increase your rates. If overhead costs are too high, find ways to cut back. There are other businesses like yours around. What is their secret for operating profitably? Think before you spend. When considering any new business expense, including marketing and sales activities, evaluate the increased earnings you expect to bring in against its cost before you proceed to make a purchase. You can often increase your profitability simply by delaying expenses to a later month, quarter, or year. Don't be afraid to hire. Retailers and restaurateurs wouldn't consider operating without employees, but many service businesses limit themselves by being understaffed. Almost any business can benefit from hired (or contracted) help. Business owners can often better use their talents for generating revenue than for running errands and filing. Pay yourself a regular salary. If you are incorporated, you may already be doing this. If not, allocate an amount to owner's compensation on a monthly basis. Each month that your business meets its profitability goal, pay yourself the full amount. When you miss your target, dock your "pay" and when you exceed it, pay yourself a "bonus." Writing yourself a monthly paycheck will give you a strong incentive to keep your business profitable. Evaluate the success of your business based on profit, not revenue. It doesn't matter how many thousands of dollars you are bringing in each month if your expenses are almost as high, or higher. Many high-revenue businesses have gone under for this very reason -- don't be one of them. About The Author C.J. Hayden is the author of Get Clients NOW! Since 1992, C.J. has been teaching business owners and salespeople to make more money with less effort. She is a Master Certified Coach and leads workshops internationally. Read more of her articles or subscribe to her free newsletter at http://www.getclientsnow.com.
MORE RESOURCES: Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting |
RELATED ARTICLES
ISO 9001 Registration - 8 Steps for Success You've made the plans, built the quality system and conducted the audit. So how do you register your company as ISO 9001 conformant? And how can you be sure you're getting the most value for your investment? Here's how the process works. Problem Solving the Problem Solving Meeting We go to meetings to share information, to report on project status, to make decisions, to get the free lunch, and because we were invited. (Sorry that I digressed). The Cheapest, Forget It ! Wouldn't it be great if we got get the cheapest price on everything. I know I wouldn't want it. Loyalty, Motivation And Work-Life Balance Managers who aren't loyal to their people can't expect loyalty in return. Companies that complain about employee loyalty have usually done nothing to earn loyalty, often routinely lying to employees, demanding sacrifices that are never rewarded, shunting them aside and casting them off in the name of good business. Do the People in Your Organisation Dress For Success? What really amazes me, with all the personal and professional development seminars people attend, from executives in corporate world, business owners and employees alike, very little investment has been made into the way they look .. How to Make a Difference Every Day Every day, everyone can make the world a better place. It's simple; it's quick and it is free. Counseling Interviews for the Marginal Employee ACTIVE LISTENING: The most frequent cause of failure in therapeutic counseling interviews is the interviewer's tendency to talk too much. Numerous studies have shown that in counseling interviews the average manager will talk as much as 85 percent of the time. Narcissism in the Boardroom The perpetrators of the recent spate of financial frauds in the USA acted with callous disregard for both their employees and shareholders - not to mention other stakeholders. Psychologists have often remote-diagnosed them as "malignant, pathological narcissists". Create Your Dashboard for Success Driving down the road our eyes frequently scan the vital instruments on the dashboard that monitor speed, fuel level, coolant temperature, and oil pressure. The modern vehicle also has many more devices that constantly monitor various systems for fuel mixture, exhaust gasses, timing adjustment and others. Parenting Your Employees to Better Performance Have you ever worked for someone who was such a micro-manager that it drove you crazy? And have you ever worked for someone who was so hands-off that you felt like a lone warrior on the battlefield? These are examples of you working for leaders who did not adapt their style based on the employee's needs. I would venture to guess that you were not entirely motivated to put out your very best effort every time when you were feeling such frustrations. Are Your Meetings Smart? Soon after I finished a brief seminar on how to accomplish more in less time every day, Roger shook my hand and said, "I can use what you said. But there is one thing you didn't talk about. Making Meetings Work We have all attended meetings that were boring, mindless and profoundly ineffective. Meetings don't have to be a waste of time. Procrastination and JDI! In a management role procrastination can seriously hold back progress and demotivate individuals and teams who, full of innovation and drive to move forward, get frustrated and confused when action is held up.There are a number of steps that will help the procrastinating manager. Why Businesses Fail - And What You Can Do About It! Have you unintentionally set your business up for failure?No one sets out to fail! Most business owners read all thestatistics (maybe more than once) before they open theirdoors. Many know the reasons why businesses fail. Internal Prisons: The Thief of Productivity and Quality in our Workforce As a professional speaker, one of my biggest challenges is to grab the attention of my audience within the first few minutes of the presentation- grab them by the throat if you will. I do this by coming out in a suite and tie, following an introduction in which I have been described as a recent college graduate who earned both of his degrees with a 4. Change or Die! To Change Your Organization, Hire a Business Coach It is a common business axiom - change or die. As a small or mid-sized business owner or a manager, there will be times you will need to make changes in your organization but may not be sure how to go about it. New UK Laws on Staff Dispute Resolution and Disciplinary Procedures October 2004 saw the introduction of the Employment Act 2002, which has brought a new approach to staff dispute resolution.It has long been acknowledged that disputes in the workplace are disruptive, stressful, and costly – both for employers and employees. Creativity and Innovation Management in Conservative, Staid Organisations Conservative and staid organisations generally have a harder time implementing creativity and innovation into their day-to-day work processes and people. Leaders may want to capture the benefits of creativity and innovation, yet there may be relevant and almost contradictory issues that they have to deal with, including:a) It may be that a conservative culture is desirable (may result in a greater fit with the client base, for example). 10 Ways To Work Through A Business Slowdown In running any kind of business, it's inevitable that sometimes business will slow down. This might occur due to an upcoming holiday, seasonal variations, or uncontrollable circumstances. Can Your Business Run Without You? If you are a business owner or a business owner to be, let's examine this scenario.Like other people, you are so excited when you first started your own business. |
home | site map | contact us |