Our 5 steps for growing your business while increasing profitability
1. Get your team involved:
Your team will need to know what you are up to. They need to know and understand your goals. How can you expect them to go on this journey with you if they don’t know where you are trying to go, how you want to get there and what you are going to do?
Get them involved in the process. There are two ways to increase profitability: Revenue and reduction of expenses. It’s amazing what solutions your team will come up with. We guarantee there will be at least one that you would never have thought of!
2. Make an quarterly action plan
We aren’t talking a 100 page full cycle plan here. We are talking about a 1 page plan. Break it down in to action steps. You should be determining where you are today and what you need to do in the next 90 days. This should then be broken down further into monthly and then weekly steps.
This isn’t an all encompassing task. You likely aren’t going to get it right the first time anyway. But the more your team does this the better you will get at it and the most successful you will become.
3. Measure your key performance indicators weekly
(see our prior post “Cash is King!” for what a key performance indicator is)
Most business use historical information to make their decisions, often last year’s financial statements that may now be 4 to 6 months after your year end. Is the best way to make decisions today to base those on numbers from as long ago as 18 months? We think not.
With today’s technology you are capable of getting real time results. This can be a hard adjustment from the traditional desktop accounting software. It’s well worth the learning curve and your access to information will improve 10 fold!
4. Give bonuses, not raises
When you give a bonus, the money is already in the bank and based off of actual performance. When you give a raise you are increasing expenses forever! If you actively engage your team they will understand how their bonus was calculated and be engaged to continue to help the company grow. Don’t jeopardize your cash flow by giving raises.
5. No accounts receivable
Try driving past the first window at Tim Horton’s and see what you get at the second window? They don’t do credit and neither should you!
As soon as you carry a receivable you have entered the banking business. If a client/customer doesn’t pay on time they will crush your cash flow, especially if you have to remit that pesky HST to CRA before they have paid.
If you would like further information on any of this points or help in putting any of them in place, please reach out to us. We are here to help.