You have been in business for years. You are doing OK. But, the big breakout has not happened yet. The profits you dreamed of have not arrived. Is it impossible to make more money or are you stuck in a permanent rut? The good news is that with the help of advisors like Exigo Business Solutions you can improve this picture and, in fact, maximize your profit in 2020. How can this happen? It has to do with a simple but powerful system called Profit First.
It is easy in a small business to get stuck in a rut. You are making enough money to get by and even put a little away for retirement or a rainy day. The day to day operations of your business take up your time and you do not see or recognize the inefficiencies that are sucking up the extra profits that you could be earning.
Profit First helps fix this situation two ways. As the name of the system implies, you take your profit first. You will no longer tally up revenue and subtract expenses to get profit. Rather you will tally revenue, take your profit, and what is left over will go to expenses. Since you know your arithmetic you already realize that if you increase your profit, you will need to reduce expenses. Here is where Profit First requires that you use bookkeeping software that is up to the task. Ideally, this is the best bookkeeping software for a small business, QuickBooks.
With Profit First you will set up several bank accounts to segregate profits, owners pay, taxes, and other categories from the account for general expenses. Then you will allocate money to profits, owner’s pay, taxes, and other accounts as required on the tenth and twenty-fifth of each month. This is the first an essential step to maximize your profit in 2020. The next step is to get your financial house in order.
Perhaps you fit our profile of a small business owner stuck in a rut of mediocre profits and spending all of your time managing the details of the business. It would not be hard to do because that is a common situation. Details of your business that are costing you money are right under your nose but hidden by the low level of chaos that is an operating business. Finding those inefficiencies is the job of a good bookkeeper using the sort of tools that generate insightful reports.
A while back we wrote how you should use the results of your bookkeeping to drive your business decisions. But, you need a tool like QuickBooks Custom Reports to make this work. Then you will gain actionable insights from your reports and will be able to reduce expenses. And, in turn, this will allow you to increase your profit allocations for 2020 and beyond. Maximize your profit in 2020 by adopting the Profit First approach. Click here to set up a Profit Maximizer session.