Turn Your Business Into A Cash Cow
More and more we see business owners who are great at making money, but lousy at keeping it. There’s always some reason in their minds why this happens. But the real reason is that they often fail to fully understand their financial statements. Or, they don’t generate them at all. If the whole point of business is to make money, then that means you have to know how to track it.
The most common and worst excuse for not tracking their finances we hear is, “Well there’s cash in the bank.” This is akin to saying that you have water in your house, even when that water isn’t coming out of the tap, but rather is seeping through the ceiling.
We’ve said it before and we’ll say it again. You must not only have an updated (within the last 30 days) set of financials, but you must know how to read it. The three primary financial documents for a business are Profit and Loss, Balance Sheet, and Statement of Cash Flows. The best way to read them is over a period of time, totaled by years, quarters or months. This approach will not only provide a trend, but will literally tell you exactly which aspects of your business are succeeding and which are failing. To say it’s the holy grail of your business is an understatement.
What does this have to do with turning your business into a cash cow? Everything. Think of it this way. If you can identify exactly which of your business lines are most profitable, which are least profitable, and which expenses are probably no longer necessary, you will be able to drastically improve your bottom line. You will obviously focus on the most profitable business lines, drop the least profitable ones (or outsource them to a complimentary vendor), slash wasted expenses, and voila, a cash cow.
Now, if you’re reading this, chances are you don’t fully understand your financials. Or, maybe you have a basic understanding of how they operate, but you may be too close to the workings of the business to be able to take a step back and get some real perspective. This is where we come in. We can teach you how to read your financials, or even how to get the data standardized, and then help you analyze the results.