February 11, 2020

Are Your Profits in Focus?

Profit First Methodology
Ronald B. Allen
Success in business does not just happen. Any business owner knows that a business needs to have a business plan. There need to be products and services, marketing,effective inventory management with tools like QuickBooks,and a lot of hard work. The point of all this is for your business to make a steady and routine profit. All too often a small or medium-sized business does almost everything really well and still does not have a profit to show for all of its efforts. The point is that just like your business needs a plan you need a plan for profits as well! Are your profits in focus? If not, you need the tools, help and advice to make profits the top priority of your business. A good first choice to help you focus on profits is to use the services of Exigo Business Solutions in the Kansas City area.

Are Your Profits in Focus?

Focus on Your Profit

You need to make a profit for your business to survive. You want to make a profit to live the life you always dreamed of. And, you need to make a profit in order to grow your business to its true potential. But, are your profits in focus or are you constantly occupied handling and preoccupied with the details of your business. To focus on profits you do not need to count the cash on hand every night and keep consulting your bank balance. What you do need is good bookkeeping and accounting. And to get the skill sets that you need it may be necessary to outsource your bookkeeping and accounting. You need to find the hidden costs in your business and deal with them.

Good Bookkeeping Helps Put Your Profits in Focus

Your bookkeeping needs to be more than just adding up columns of numbers and organizing things so that you can do your taxes. The point of good, solid bookkeeping and accounting is to present you the business owner with a clear picture of the length and breadth of your business. And it is to present the details in such a way that you can track cash flow, spot excessive spending, and make effective changes to budgeting and cash flow management. At Exigo Business Solutions in the Kansas City area we use QuickBooks,the best accounting and bookkeeping software for small and medium-sized businesses. We present our clients with business intelligence-level information about their financials and actionable details from their reports.

Profit First Makes Taking Your Profit a Routine and Then a Habit

Profit First is regular booking with one very important difference. This method of doing your books modifies the usual way that income, expenses, and profit are tallied up.The traditional way is to sum up your income, subtract expenses, and what is left over is profit. In the Profit First method we start with income but subtract the profit that you take which leaves us with expenses. Because you start with the same numbers, you will need to reduce expenses in order to take a routine and steady profit. Are your profits in focus with your current bookkeeping? They will be when you work with Exigo Business Solutions to convert to the Profit First method!

The way that you will start Profit First in your business is to set up separate bank accounts for profit, owner’s pay, taxes, and operating expenses. Then you will determine the percentages of available income that will be allotted to each account. Contact us at Exigo Business Solutions for help in setting this up.

To Get Your Profits in Focus You Need to Understand Your Cash Flow

Understand Your Cash Flow

This is the part that businesses all too often neglect.This is not done out of laziness but it happens because the bookkeeping does not show you the right things! We use QuickBooks bookkeeping and accounting software and Exigo Business Solutions. Sometimes we use business intelligence software that works with QuickBooks and sometimes we use the custom reports from QuickBooks itself, depending on the needs of our client. In either case, the end result is that our clients get financial reports that they can use to budget more effectively and to efficiently manage cash flow.

Getting Your Profits in Focus by Countering the Effects of Parkinson’s Law

Parkinson’s Law is just a fancy way to say that jobs within a company tend to take longer than they should and that tasks to which a budget is assigned tend to eat up all of the budget and more. This is called Parkinson’s Law because a Brit named Parkinson noticed this in his time in the last century as one of Her Majesty’s civil servants. This is really just human nature but it is the rot that eats away at your business profits. It needs to be identified and dealt with. Are your profits in focus? When they are it will be because you are getting good bookkeeping reports with actionable details and you are acting on them in order to reduce costs through better budgeting and cash flow management!

Make Profit a Habit

Making profit a focus of your business starts with the use of the Profit First method and supportive bookkeeping and accounting services and solutions. There is discipline involved and the rewards are immediate. Once you start allocating money to profits, owner’s pay, taxes, and the operating account twice a month you will see your profit steadily increase. Then, as you adopt effective accounting software and reports, you will reduce your overhead and be able to allocate even larger percentages to profit.

The journey to routine profits in any business starts like all other journeys. You take the first step. That first step is to contact us at Exigo Business Solutions in the Kansas City area. We will help you with the steps toward instituting Profit First, making sure that your bookkeeping software is what you need, and helping you maximize your profit.Always remember that profit is a habit and not a happenstance!

Choosing Days to Allocate Funds

Profit First Methodology

Real Revenue and How It Is Used

Profit First Methodology

Reserving High Percentages for the Tax Account Even When Taxes Are Already Taken Out

Profit First Methodology