GUT CHECK!
If you have Gross Profit, the next step is to deduct your Expenses to determine Net Profit. Expenses can easily be lumped into a pile and overlooked as “necessary”. Plan half and day and dig in to truly understand what you spend.
Here are a few inefficiencies that we see often in Expenses:
Are you used to sharing every detail with your attorney during a long conference call? Do you call your IT guy at the drop of the hat? Take a moment and assess if your Professional Expenses are truly CRITICAL. Talk faster and try turning off and unplugging yourself. You may save thousands.
Do you have unused space that is just sitting there? Whether you anticipated growth that didn’t happen, or had to downsize, be clear that unused space costs you money. Review your lease to see if you have a sub-lease option and get marketing!
Who, or what, in your company is not quite up to snuff but you could “never live without”? Do you find yourself saying “It’s always been that way” or “She’s always been in charge of that” yet in your gut you know something better should be happening? Be realistic that everyone is replaceable and everything can change. If you don’t make changes to be profitable, you won’t have a company for the sacred cows to come home to.
In this version of the sacred cow, the owners treat the company like a personal checkbooks, often overpaying themselves in salary or draws to compensate for personal financial needs or wants. This is a fast way to closing down a business.
In summary, ask yourself:
- If you had to cut 20% from your business, where would you do it?
- How can you save on all expenses?
- Which expenses directly affect sales and revenues?
- What would it take to downsize?
These are tough questions, but having the answers are the first step to righting your profitability.
Plentiful Professionals
Return to the Profitability module