You’re probably not making the money you should be from your business and what to do about it.
if you have business under $1 Million or even under $100k in annual revenue and you have a bookkeeper that handles everything you aren’t making the money you should be from your company.
It’s true. I bet your bookkeeper or accounts gives you a couple reports every month, quarter or once a year (I hope more often than that). The problem with the reports is that you probably have no F-ing clue what they mean.
As Keith Cunningham (a brilliant financial teacher) says “either the number looks good and you take a drink or it looks bad and you take a drink”.
Is this you?
If so you’re losing money that you should be making aka leaving it on the table.
At this point you might be thinking sure I just need to grow my revenue a little more and I’ll be making more money. Seems good in theory right.
I played this game for years: A little more sales and it’ll all be profit.
Once I hit $100 000 per month and was still struggling with profits I realized there was a problem. I had no idea where the money was really going and thinking just sell more wasn’t working.
It’s about focus, whatever we focus on all the time is usually the strongest area of our business or life. Think about it.
What’s your strength in your business? Sales or marketing or providing the service or whatever.
I bet that area is rock solid in your business but how is your other areas that you don’t focus on: Marketing, sales, financials, etc.
Because you don’t focus on your weak areas you don’t learn and improve and for most people financials are a huge weakness.
Imagine it like this: Ever have the experience where one area of your life is great but other areas aren’t…usually it’s because you aren’t focusing on that area. The liberating thing is that you have the power to change your focus and grow the other areas.
This is the shit why so many businesses fail in 5 years or whatever and so many others aren’t as successful as they could be.
Here’s a few questions that if you don’t know the answer to you’re losing money for the work you’re already doing:
What’s your profit margin percentage?
What’s your percentage of costs is your overhead (even if you work from home by yourself)?
What’s your cost of goods target?
DON’T GLAZE OVER IF YOU DON’T HAVE ANY CLUE!
That’s where most entrepreneurs are…whether you’re trying to do $100k per year or per month it’s the same story.
Imagine if you didn’t have to even worry about getting more sales and could increase your profit margin…how would that feel, what would that do for you?
Ok if you’ve stuck with me this far you’re a driven entrepreneur and I like it.
It’s time to push your comfort zone and learn this shit…yep.
DO NOT STOP USING YOUR BOOKKEEPER.
Hells no I ain’t crazy but do learn wtf is going on.
I got the online version of quickbooks that links with bank accounts and credit cards…extremely basic solution, sort of.
It took me months of just a few hours per week to really get it but now I can tell you that our cost of goods target is less than 30% and profit margin target is over 30%. Currently our labour cost is about 40% and fortunately our overhead percentage is off the charts (good).
What happens as a side benefit is you start questioning where you’re spending money. I realized that we were spending almost $1000 on velcro every month. Once I found that I had someone research better pricing.
Now we order from overseas at about $200 every 3 months. Yes that means we saved on average $930 per month just because I started paying attention.
Now you may not have $930 sitting around but you have to know where money is going and what the targets are.
Your accountant has different goals than you. For example they are more concerned with not showing profit because that’s how you don’t pay tax and everything balances.
Good for taxes bad for business owners.
Get quickbooks or some other tool, plug your info in, start tracking everything…it won’t make sense right now but it will in the future…trust me and don’t listen to your accountant saying don’t worry about it.
Do it anyway and just keep it separate.
Stick with it and I’m going to continuing sharing how to look at the different areas in the future.
Kill it!
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