Blog Image

Where Are Your Profits?

As you gather your tax documents, have you stopped to ask, “Where did the money go?” You don’t need to be a CPA to track where your money, and your profits have gone. For many businesses there are costly leaks in the flow of money. Fortunately, leaks are preventable and fixable.  So where are they?

Starting with basic steps – how is your record keeping? That stash of receipts in your car or bag is a recipe for missed accounting.  If you dutifully write what each receipt is for but never apply that cost to an invoice or job you have a leak.

Are You Systemizing?

Invoices need to be reviewed and audited. Are you charging for all of the services and materials you provided to the client? If not, you have a leak.  Are your customers paying you on time? You should not be financing your customers – they owe you for goods and services so ask for payment.  Your Accounts Receivable balance is a leak. 

How often are you looking at your numbers? Every month, check your Profit & Loss statement.  This is not an annual task – you need to stay on top of your numbers. For each service/product/job, look at your costs and your pricing.  Costs should include labor and overhead.  If you are only including the cost of the physical product, you have a leak.

There are a number of fees that are part of doing business in the modern world.  A few that come to mind are shipping and credit card processing fees.  When you price your product or service, who is paying those fees?  If you are not including fees in your price, you have a leak.

Know Your Strengths!

Most business owners are great technicians.  However, they are not always great at things like accounting, taxes, legal advice, marketing, insurance, financial planning…. The wise business owner recognizes their limitations and hires experts to do what they are not good at doing.  If you are spending several hours per week trying to update your website and post on social media instead of selling and managing your business, you have multiple leaks.

Let’s say you did hire a marketing firm and launched a marketing campaign – great! Are you measuring how effective it was? How many new customers did it generate? How much in additional sales have you seen since the campaign launched? Marketing is an investment that should pay for itself in additional revenue.  If you are not measuring your results, you have a leak.

These are just a few areas for you to review to improve your profitability.  What are your leaks costing you? A master plumber might charge over $100/hour to come and fix a leaky pipe.  Take the time to fix your leaks, save yourself a large plumbing bill, and enjoy more profits! Not sure how? Contact me for your free coaching session:

Author: Sandy Merritt, Business Coach in Louisville, KY

Where Are Your Profits?