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Business Revitalisation

More Profit

This article is a bit different from my usual in that I want to explain a new service I am offering. It’s come about due to my own reflections on where my business was going and how was it doing? Was Accounta actually making a profit – not just for tax/accounting purposes but actually dollars in the bank, as Director was I doing my best to ensure my shareholders were getting good returns on their investment – ok so as the sole director and shareholder that’s all me, but really was I making any money and if I am where was it going?

It doesn’t really matter if you are a sole trader, a company employing 20 people, a turnover of $50,000 or $10million, just starting out or been in business for years, if you can’t answer the question – where’s the money going? Then you need to take a look at your figures, assess where the expenditure is and, if it’s as bad as it usually is, what can I do about it?

Most business owners look at their bank accounts – is there enough money in there to cover the costs this week/month, pay the bills, the employees, the GST, the provisional tax – did I forget anything? Oh yes, have you got the money to pay you!

A lot of businesses run month to month, contract to contract, for little return to the owners, you can start to feel a bit dejected, question why you are doing this, day in, day out, for what? Being a slave to your business isn’t much fun really.

In America 25% of small businesses have two weeks or less of cash in the bank. 75% of businesses have a month or less cash in the bank. That’s the amount of cash they would need to cover the two weeks or month of expenses. Not a very comfortable position to be in and it’s probably the same case in New Zealand.

A common survival trap then starts to manifest – sell more, sell faster, get money anyway you can – loan’s, credit cards, put more of your own money in – Your business becomes an out-of-control money eating monster - it only stops when the receivers are called in!

However, it doesn’t need to be like that. What if, rather than you serving your business, your business serves you?

Accountants work to a very traditional accounting formula “Sales – Expenses = Profit”, it’s how our profit and loss statements are structured - in other words profit is what is left after we have deducted expenses from sales. What if we turned that around and took a behavioural approach and take the profits out first then only spend what’s left. We’re using the same titles but moving the focus, we’re not leaving profit to chance. To achieve this we need to be looking at the expenses and what you can actually afford, what you actually need and what you can get rid of. Tough questions and actions are needed, but the results can be amazing.

Effectively you end up not just revitalising the business, but you revitalise yourselves as well – because you start to get more out of your business, you start to get your returns and you start to get growth.

Business Revitalisation is one way to do it, it’s a simple process, but it does take discipline to implement. It starts with an assessment that will quickly tell you where the money is going. Want to take that step?? Give me a call.



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