Multi-Unit Franchisee Magazine Issue I, 2016 | Page 78
Finance BY ROD BRISTOL
More for You!
Create additional profit in 2016
B
y now you’ve completed all of
your financial budgeting and
planning for 2016, have it set
up on a month-by-month basis,
and have organized your financial reporting to be able to measure your progress
both on actuals to date and performance
to plan. Right? Riiiiiight!!
Perhaps you’re not at that
point in the financial management of your company. But what
is the minimal acceptable standard for financial reporting in a
business today? It’s an income
statement and a balance sheet
delivered to you, the business
owner, by the 15th day following the close of business of the
previous month, every month,
period! There is no other minimal acceptable standard.
If you’re attempting to manage your business with quarterly,
half yearly, or (Good grief!)
annual financial statements,
you are missing a tremendous
opportunity to drive up the
financial performance of your
business. Accurate, timely financial information that you
actually understand is the key
to your improved financial
success in 2016.
There are no excuses! If
you don’t like QuickBooks,
try Xero. If you need assistance, terrific free counseling is available
through America’s Small Business Development Center counselors, and there is
probably one near you. (To find them go
to americassbdc.org.) You will be amazed
at what is available to help you get to the
minimum acceptable standard of financial reporting.
Give yourself a $50,000 raise
This is your financial assignment for
2016, in case you haven’t given yourself
one yet. I want you to look inside your
business and I want you to find, create,
figure out, and implement a 1 percent
price increase. If a significant portion of
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what you sell is incredibly price-sensitive,
find something that isn’t and increase it
by more to ultimately create a 1 percent
overall price increase in 2016.
Review all of your Cost of Goods Sold
(that is everything you spend before creating your Gross Profit on your financial
statement). I want you to find and save 2
Here is the hard,
fundamental truth:
To improve
the bottom line
in your
company,
you have to
improve
you.
percent on all of those costs. It could be
that you need to negotiate better with your
suppliers, perhaps adjust the pay scale of
the people who actually perform the work
created by the sale. I don’t know what it
is for your business. I’m giving you the
assignment to go figure it out and do it.
I want you to look inside all of your
General and Administrative expenses and
find and implement a 2 percent decrease
in your Administrative costs across the
board in 2016. Review every expense
that falls below your Gross Profit line
(including administrative wages, bank
fees, credit card fees, insurance, rent) and
figure out a way to pay 2 percent less for
all of it. This requires work. However,
the combination of all of the above pays
great dividends to you.
Let’s assume for a moment that your
business generates $1 million in annual
revenue. The 5 percent I have just described
is your $50,000 raise next year. Today that
5 percent is going somewhere else, not to
you. As the owner of your operation it is
your responsibility to find it and deliver
it back to you and your family.
We teach that not all solutions come
from driving up the revenue line. While
increased sales volume is important, profit
is actually created through the
management of careful, incremental controls on all of the
expenses that fall between the
revenue line and profit line.
More ODP for you!
At Profit Mastery, our goal is
to deliver to you more of what
we call Owner’s Discretionary
Profit: the amount of money
available for you to do what
you want with. Take it home,
reinvest in the business, or pay
down debt and reduce the risk
for you and your family.
Now, if you can honestly
look yourself in the mirror
and say you have absolutely
no idea what I’m talking about
and don’t understand any of
the above terms, I have good
news! Finance is not that hard
to learn, and it’s actually fun
when we teach it. If you’d like
more information about how
to study business finance online through Profit Mastery
University, or are interested in having us
come and present at an upcoming conference, please don’t hesitate to contact me.
Here is the hard, fundamental truth:
To improve the bottom line in your company, to drive up profits and cash flow and
improve the standard of living for you and
your family, you have to improve you. No
one else can do it for you.
Rod Bristol is executive
vice president at Profit Mastery. Learn more at www.
profitmastery.net, 800-4883520 x14 or write to bristol@
profitmastery.net.
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