Do you have the mindset that "making more money will fix your money problems"?
It is an all too common scenario: a business owner had cash flow problems at $1mill a year, and thought that by growing it, it would alleviate their money problems.
They built it up to $2 or $3mill or more, and low and behold their money problems still followed them.
Now they have a much bigger business, with more responsibilities, more overheads, more stress, but still have no more money going into their top pocket.
They eventually throw their hands in the air, either scale their business back down or just stagnate, they give up on their dreams and settle, feeling overworked and underpaid, thinking what is the point.
Important Principal: If you can’t control the money you’re already making, making more money won’t solve the problem, only amplify it.
When it comes to your business finances, it's important to maximise on the profitability and return from your current work BEFORE you take on more work.
Take a good look and analyse your financial statements regularly so you can see where money is coming in and going out, and identify errors so you can put strategies in place to fix them.
Firstly, know your Triple Bottom Line Reporting System:
1. Profit & Loss (P&L statement)
2. Balance Sheet
3. Cash flow Forecast
Here are some things to consider in each:
- Your Profit & Loss: Know your products and services (economic drivers) that gives profitable results by maximising returns. Do you need to re-adjust your pricing strategy?
Are you overspending on unnecessary items, services or more staff? Learn how to run a lean business by getting your fixed expenses under control.
- Your Balance Sheet: Tighten up your loans by negotiating your loan rates with your bank.
- Your Cash Flow Forecast: Get your invoicing strategy and data management control and right.
The purpose of understanding and optimising your triple bottom-line reports is to maximise sales, minimise expenses and maximise profitability so that you will have more cash surplus to keep moving your business ahead.
Founder - Pravar Group
Are you a Trades, Construction or Service Based business owner turning over atleast $1M p/a, and want to release the time and financial constraints in your business & life?
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