Powering up Profitability
Keep More of the Money you make!
Welcome back to our series of powering up profitability!
In our last blog we talked about the importance of planning and the benefits of Dynamic Planning. Now that we have that plan in place, let’s talk about the bottom line!
The money is for something so let’s talk about how to generate it! There are so many great programs and trainings available on how to create the top line, what I am talking about when I say Profitability is the bottom line. It’s the money that you keep.
The reason we keep numbers is for our own financial leadership, not just for filing taxes at the end of the year.
Numbers are for reporting so you first want to determine what reports you will need to keep you in the driver’s seat so that you can make decisions from numbers and note emotions
Then get into the habit of reviewing your actual financial reports against your forecast on at least a monthly basis. Asking yourself what worked, what didn’t and what’s next is what will ensure your success. Instead of waiting until the end of the year to do this and asking the question – So, how did we do? Then it is too late to make any adjustments and I guarantee you that you have left money on the table. One of the biggest places I see error is paying way too much in tax.
The reports that we use most often are:
- Profit & Loss – this is where you are managing your cash flow and can see your profitability margins
- Balance Sheet – this is where you can see your wealth develop, your equity or asset position depending on the kind of company you are building.
When your forecast is used along with these reports you are able to make adjustments to the forecast in light of what is actually happening. By making adjustments you can see into the future what the impact will be. It’s almost like having a crystal ball, this is why it is called dynamic planning.
ACTION STEP: Set a date on your calendar each week or at least once a month for a money date, a times set apart to connect with your numbers.
If you have questions hit reply and ask away, we are happy to help!
For a deeper dive into all areas of profitability download our 10 Tips for Increased Profitability.