Secret Recipe Boosting Business Profit Cash Flow Value
As a Certified CFO, accountant, and business owner specializing in improving small business profit and cash flow, I often see entrepreneurs struggle with enhancing their financial outcomes.
The Role of a Tax Accountant
Typically, business owners hire a Tax Accountant to handle their taxes. These accountants primarily focus on past financial records due to the demands of tax compliance, leaving little time for future financial planning. Their job essentially boils down to preparing financial statements and completing tax forms based on the information you provide.
Identifying Key Numbers for Financial Success
Has your tax accountant ever offered to show you the key numbers in your business that can be tweaked to boost profit and cash flow by $20,000 to $50,000? If they did, you’d probably jump at the opportunity, exclaiming, “Absolutely!”
Finding the Right Information
Secret Recipe Boosting Business Profit Cash Flow Value. So, where can you find the information needed to steer your business toward greater cash flow and profitability? Is the solution getting more or better reports from your accounting system? While this might give you a clearer picture of recent events, it won’t necessarily help you foresee and improve future outcomes.
The Importance of Understanding Key Metrics
Understanding which key metrics truly drive results is what’s most crucial. Once you grasp these key figures, you can make adjustments to achieve better outcomes before experiencing less-than-satisfactory results. You might not believe it, but you can potentially add thousands of dollars to your bank account without taking out a loan by making small improvements to these key numbers.
Analyzing Key Business Metrics
Let’s consider a business with the following eight key metrics:
Sales opportunities: 5200
Actual sales made: 1560
Average Transaction Value: $320.51
Variable Cost of Each Sale: $224.36
Overhead Expenses: $100,000
Average customer payment days: 44
Average supplier payment days: 42
Average stock turnover days: 26
Of these, only one—Overhead Expenses of $100,000—appeared in the company’s most recent financial statements from their accountant.
Real-Life Impact of Small Adjustments
Secret Recipe Boosting Business Profit Cash Flow Value. This small business, with sales around $500,000 and a profit of $50,000 (numbers have been rounded), wanted to earn more for the effort and time invested. I demonstrated to the owners that by improving each of these key figures by just 2% or 2 days, they could see significant gains in both cash flow and profit:
- Net Profit Increase: $33,696
Cash Flow Increase: $32,617
The Benefits of Improving Key Numbers
It’s clear how small adjustments in these figures can collectively make a substantial positive impact on the business’s bank account and overall profit. An important aspect not to be overlooked is the added benefit of these improvements. Increasing profit can also enhance the value of your business, which is beneficial if you decide to sell in the future.
Do you know your key metric numbers? Do you know how to improve them? How much could you be missing out on?
How We Empower Your Business
- Target Setting: Understand your aspirations and tailor a straightforward plan to meet them.
- Monthly Assessments: Regular check-ins to refine strategies and focus on what matters most.
- Clear Scoreboards: Monthly business scorecards that are easy to understand and act upon.
- Focused Action Plans: A carefully curated list of next steps designed to optimize your business’s performance every month.
As a certified CFO, I bring a robust blend of expertise and accreditation to the table, ensuring that my strategic financial management and controller services not only aligns with industry best practices but also drives substantial value and innovation in the services sector. My certification is a testament to my commitment to excellence and my capability to navigate complex financial landscapes effectively, making me a trusted advisor in your journey towards greater profitability and business success.
Start mastering your financials today! Dive deeper into how outsourced accounting services can revolutionize your business strategy and lead to sustained profitability. Don’t wait, unlock your business’s full potential now!
Guaranteed Profit Boost
“I can find any small business a minimum of $10,000 additional profit in just 45 minutes.” GUARANTEED!
Request a complimentary strategy session and challenge me.
