The 4 P’s of Growth & Prosperity – Profit

Note:  Recently, StaffScapes had the pleasure of presenting at a local Chamber of Commerce luncheon. During this speech, we focused on points to help the small business owner grow and prosper in 2012.  We have taken this speech and created a series of blogs we will post based on each of the 4 P’s we feel are critical to your business.
 

Last week, we focused on the People that make up your company.  If you didn’t get a chance to read this post, click here.  This week we are outlining key methods of working with your numbers for business success.

The Profit Component
Now that you have analyzed the people component of you business, it’s time to focus on profit.  After all, you got into business to make money, right?  Business would be much easier if all you have to do is open the doors and customers and cash would flood in.  In theory, customers in and product out will make you money, however there is so much more to the picture to ensure a profit.  One key snapshot for the health, growth & prosperity of your business are your numbers.
 

You first need to begin with your financial statements and getting to know what the numbers mean.  Review each statement.  If you are unsure of any part of the statement (how the numbers relate to cash flow and profit/loss, or why you need to have statements) talk with your CPA or accountant for clarification. Once you truly understand the impact the numbers included in your statements have on your business, you can begin to make sound strategic decisions that will move your business forward. 
 

With a full understanding of your numbers, it is time to put that knowledge to work. Based on your past performance, create an operating budget to help guide your future decisions. Be realistic with your projections and use your budget to plan sales and marketing initiatives that will generate additional business for you.  As for expenses, keep full records and make smart decisions.  Do you really need brand new furniture for your start-up business or can you get by with quality used furniture for the first year or two?
 

Now that your budget is in place, the work doesn’t stop.  You must continually update the numbers and make changes as necessary.  Did you have more or less sales than you projected? Did a huge expenditure occur that was unplanned?  If so, this could change your cash flow and operating budget. Knowing where you stand at any given time will help you to make the best decisions that will keep your business strong and viable for many years.  
 

By monitoring your numbers frequently, you will reduce the potential for surprises that could have a negative impact on your cash flow and revenue.  On an annual basis, we suggest a full review and/or audit of your books. Once completed, use these numbers to indicate your goals for the following year.  Basing decisions on hard data compared to just “winging it” will help you to make solid decisions. 
 

Our next post will focus on protecting everything you have worked so hard to develop. We will discuss risks and liabilities and methods to insure and protect your business.
 

Understanding the business of employment is tricky and StaffScapes can help you improve the “Profit” component of your business. By helping you to stay compliant and reducing non-revenue generating activities we can help you grow and prosper and keep you focused on the reason why you got into business. We will help you with payroll and tax compliance, claims mitigation, and other human resource tasks to give you the time to concentrate on your business.

Written By: Jake Stratton