Step 3 to Optimising for Profit & Cash
Updated: Oct 12, 2021
Here’s the third step you need to take right now to pull more time, money & freedom out of your business
First off, here’s a link to our earlier blogs:
Once you’ve mastered these steps, you’re ready to move onto step 3.
Numbers Strategy is all about
Creating meaningful numbers (which is different to accurate numbers)
Reviewing your profit & loss in a Strategic way
Reviewing your balance sheet
Reviewing your cash flow
It’s very much a companion to Numbers Knowledge because once you have your core knowledge locked in, then you can get Strategic.
Nailing Numbers Strategy is the third step towards pulling more time, money & freedom out of your business.
The consequence of lacking Numbers Strategy is that your business won’t be performing optimally & you’ll be leaving cash & profit on the table. This is also what we call cash & profit leakage.
Let me give you some examples of how you get Strategic around your numbers so that you’re ready for step 4 (which is Numbers Targets)
When you look at your profit & loss, and your “cost of sales wages”, are they in the cost of the sales area? And is superannuation there too?
And if any of these wages are related to non sales tasks like admin, marketing, have you moved that portion of wages & superannuation into operating costs?
Do you know what key expenses should look like as a percentage of turnover? Based on benchmarks or the rule of thirds?
Those are some Numbers Strategy 101 items that will prepare you to be able to set targets, monitor targets & take the action needed to grow your profit and cash (not just your revenue).
I’ve said it before & I’ll say it again… “there is no successful business owner who doesn’t know and use their numbers”.
What we find is that when our clients get savvy around Numbers Strategy then they can
Identify the good from the bad, that is: what are their pain points? Where is the profit and cash all going?
Dive into the problem and come up with a plan to solve it
See the results month by month
Which all adds up to a healthier bottom line.
If you’ve identified that you need to improve around numbers strategy here are my top tips
Reach out for some support around your numbers. Did you know that the best Strategic Bookkeepers & Accountants engage consultants to hold them accountable to their numbers? If they need support them it’s likely you do too
Change your mindset. Errors in thinking are often holding you back. Now that you what the consequence of no Numbers Strategy, make this a priority
Schedule time in your diary to work on Numbers Strategy (and perhaps use your project management software for this too)
Bring Numbers Strategy into your monthly financials / KPI meetings
And don’t be overwhelmed. A great Strategic Bookkeeper will take you on a journey & step by step you’ll get results.
If you follow my tips & get Strategic around your numbers you will increase revenue, reduce expenses and find more profit & cash.
Find out how to optimise for profit & cash by taking our Digital diagnostic tool.
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