Successful businesses are usually the result of doing the right things consistently over a period of time. So what are the “right” things to generate consistent profitability and increase business value? Here are 5 simple, effective tips to a more profitable business:
- Prepare financial statements monthly and take the time to review them. Regular review will lead to better understanding of the key drivers of the business and it will provide early warning of any problems.
- Prepare an annual budget that maps to your goals for the business and measure against it monthly. It should be challenging but not a “hopecast”. Understanding variances each month will help you understand when corrective actions need to be taken.
- Understand the real cost to provide your product or service, especially if you have multiple products/services. Product cost analysis is the first step in developing the right pricing structure.
- Implement Key Performance Indicator Reporting. It should be based on business success factors (ex. Revenue, Margin, Expenses, Sales Productivity, etc). It should be easy to understand, easy to produce, and produced regularly (usually weekly or monthly)
- Hold regular operations reviews with key personnel. These can be informal and one hour is plenty of time, but be consistent (monthly). These reviews foster learning and communication.
In a larger business these things would be the responsibility of the CFO. Many growing businesses don’t have the luxury of hiring a full-time CFO. That’s when a Fractional CFO can be especially valuable.
Precision CFO is your Fractional CFO. Call us to learn more or visit www.PrecisionCFOSolutions.com .