Computing business profitability
Caught up in the day to day details of running a business, many business owners and entrepreneurs overlook an important activity: Computing business profitability. Instead, they go along, not thinking about what's happening with their business finances, until there's a cash flow problem.
Never confuse profitability with cash flow.
But cash flow is not an indication of profitability. Depending on the time of year, companies that are profitable may have smaller bank balances. And companies who are losing money may have higher ones.
Computing business profitability can help you make more money. More money usually means business profitability. Try thinking outside the box. Are you spending a significant amount of time in low-return activities?
Haven't we all heard about this one! If you are spending the majority of your day completing tasks which are administrative in nature and/or which can be easily completed by other people then you are not putting yourself to best use. For most of us, the best value-adding activity we can be involved with is in bringing business in the door by building relationships, talking to prospective customers and promoting our business.
Think outside the box. Think about buying customers. If that isn't outside the box, I don't know what is!
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Saturday, October 11, 2008
Computing business profitability
