Is my business really profitable?

Owners are quick to tell me they are very profitable.

But, later in the conversation the owners share the rest of the story when they say things like…

• I don’t pay myself a salary…yet.
• I sometimes struggle to pay my bills on time.
• I use my line of credit to make payroll.
• I cannot afford to hire someone to help me.
• I cannot afford to pay for employee benefits.
• I don’t have the money to replace old equipment that I need to operate.
• I have not started saving for retirement.
• I lost sleep last week waiting for a customer payment to come in the mail.

If you’ve said any of the above comments, then your business is not really profitable.

“A truly profitable business provides money to pay the owner’s salary, meet current obligations, and invest in the future.” –Tina White

Truly profitable companies generate the money needed to:

• Pay all expenses…on time
• Pay owner salary and benefits
• Pay estimated taxes
• Hire the help you need (employee, subcontractor or professionals)
• Stop borrowing money to operate
• Replace old assets
• Create an emergency fund
• Fund growth plans
• Pay distributions – Return on Investment (ROI)

Tips to Make Your Business Truly Profitable

Review Your Prices

• Include ALL of your costs
• Project your future costs
• Calculate all 4 breakeven points: profit, cashflow, personal and growth
• Consider the value you provide

Measure Your Results

• Create a profit plan
• Review financial reports
• Calculate profitability
• Compare to benchmarks

Fine Tune Your Systems

• Convert sales to profit to cash
• Reduce waste
• Eliminate duplicate systems
• Streamline manual systems

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