Whether you read or watch the news or just pay attention to the prices from your suppliers and requests for bigger raises from your employees, you know that inflation is significantly higher than most of the last 10+ years.
Whether you are a manufacturer, a distributor, reseller or service company, knowing how much money you make on each product, product line, revenue stream, channel, contract or customer is critical to maximizing your profitability.
Business owners often push for productivity, and in a company where there are 10 or 1000 people doing the same task over and over again, it’s easy to set a goal and measure whether it’s being achieved by each individual, a department or a production line.
If you run a company and you’re thinking about where you want that company to go, developing a strategic plan can help you crystalize your goal(s) and, even more importantly, how you’re going to achieve them.
Most business owners and CEOs want to grow their top line, and many do something about it (launching new products, hiring more salespeople, investing in marketing and driving more revenue from their existing customers.) As their Chief Financial Officer, I put a focus on growing profitably.
Almost every business owner I know wants their business to make more money. It can allow them to reinvest, expand their product offerings and increase future sales or it can allow them to put more money in their own pockets.
While not every business follows or, for that matter, needs to keep their books on an accrual basis or in accordance with Generally Accepted Accounting Principles (GAAP), I believe it’s very important for everybody running a business to know what the differences are. Let’s start with an example.