Boost Profit & Cash Flow

Count the Cash. Insist on Profit

Michael Van Horn 
#7 in the series

You are in a business to make a profit.

You have other reasons as well, but none can be realized if you don’t make a profit. So getting the best financial performance is critical to achieving your business goal.

You may initially focus on getting any business. You go for the revenue! But before long you say, “Profit is no longer optional for me. Everything we do must be profitable!” This is a key transition in your company’s growth.

This kit of tools helps you overcome the profitability killers of small business and build a “culture of profitability” in your company.

Here are some of the tools we’ll cover

  • Price for profitability. Know how much profit you need.

  • Create financial statements that are an effective tool for managing your company.

  • Calculate your gross margin, for each part of your business.

  • Know the profitability of your next sale, and how to compare profitability of alternatives

  • Know the value of your own time.

  • Watch cash flow as well as net profit.

  • Watch costs like a hawk even when times are good.

  • Keep your eye on the balance sheet. Cash, receivables, payables

  • Hire a CFO, not just a CPA.

  • Borrow money when you don’t need it.

  • Know the sources of growth capital and their cost.

You don't have to be a financial whiz to understand these tools. They are presented in small-business-owner-friendly language.

Warm up exercise

From the workbook

Profitability Killers of Small Business

Do any of these apply to you?

Money management habits and attitudes that thwart profitability:

  • We always seem to underprice on our jobs, and that kills our profit

  • “When extra cash comes in, I go to BizToys Are Us.”

  •  “Since my books are always way behind, I couldn’t track expenses if I wanted to.”

  • “With a home office, I merge business and personal expenditures. I have no idea which are which really.”

  • “If we earn a profit, it all goes to taxes anyway, so let’s spend it.”

  • “Times have been good. So we’ve hired a few extra people, bought new computers . . .”

  • “Ask my bookkeeper.”

  • “We’re a bit short of cash, so just charge it.”

  • “Part of me still thinks making a big profit is immoral.”

  • “I’m afraid to look at the financials when things are tough.”

  • “Budget? I think I heard that word once.”

  • “I look at these columns of figures, and my eyes glaze over.”