Businesses need sales to stay afloat. But, to be truly successful, your business needs efficient ways to convert your sales into profits. The question to ask when you are wondering about business profits it this. How can I make my business more efficient?
Too many businesses have ample sales but profits are choked off by hidden costs. Two specific business management systems help you deal with this sort of business inefficiency. They are Profit First and Fix This Next. Profit First helps you manage cash flow and budgeting while Fix This Next finds and remedies specific business issues. Profit First “forces” you to address hidden business costs and ineffective practices by the way it manages your cash flow. But, Fix This Next is the process that does the digging and fixing.
Efficient businesses have effective business processes. How does Fix This Next help? In too many businesses the owner and managers are stuck in a revolving door situation. They think they have remedied a business issue and sent it out the door only to see it return. Repeatedly “fixing” these issues takes time and diverts your attention from other pressing concerns. It is really hard to identify business opportunities when you are constantly bombarded by these problems.
The real “problem,” however, is that many small issues are commonly the same thing coming back in multiple forms. A Fix This Next Coach can help you track down the basic problem that is usually causing multiple issues. The Fix This Next system does this by addressing the lowest-level issues in the business hierarchy of needs.
The item in the middle of this list is oftentimes the most important over the long term. It is having an organized and orderly business. When you track down and fix a problem you need to have it stay fixed. The way to do this is to have in place systems that track important issues, in real time, and alert you when something is amiss. The custom reports that QuickBooks generates are excellent for this use. When you do this correctly, you no longer see the deluge of irritating problems that used to suck up your time. And, you can quickly and easily identify when any of these problems (or others) emerge.
As we mentioned, the other useful tool for having an efficient and effective business is Profit First. What this system does is set profit as a habit and not a matter of chance. You will routinely deposit money (usually twice a month) in a bank account specifically for profit and separate from those used for other business purposes. This does a couple of useful things. First of all, it gives you a profit and a financial cushion. Second, it forces you to look critically at how money is being spent in your business. The common culprits are those that fall into the category of Parkinson’s Law. This “rule” of business and life was first stated by a former British civil servant who noted the “work expands to fit the allotted time.” A corollary is that projects always eat up all of their budget (or more). Strict budgeting and oversight tend to keep this issue in check and that is what you do in the Profit First system. The best tool for finding “hidden cost” issues, fixing them, and instituting efficient and effective business solutions is the Fix This Next system.
If you would like to know more about how to make your business more efficient, effective, and profitable by using the Fix This Next and Profit First systems, contact us at Exigo Business Solutions in the Kansas City area.