Managing the bottom line for many companies can be a stressful process but the truth is if you don’t keep track of how much money you’re making in your business, you have no idea whether your business is successful or not. You can’t tell how well your marketing is working; if you should cut expenses or multiply revenues. Unfortunately, many companies either don’t have the expertise or are too ashamed to seek the guidance that they need before it’s too late!

A lot of companies focus almost exclusively on sales or gross revenues but your first point of focus to grow or scale your company is that you need to know what your net profit or loss is and what is affecting the bottom line so you can know how to increase profits or reduce losses!

If you want your business to be successful, make the bottom line your focus and make a financial plan and check it against the actual figures on a monthly basis.

Use the variances to subsequently take immediate action to correct any problems.

Here are the steps you should take:

* Create a quarterly financial plan based on your strategic plan for your business. Budget how much revenue you expect to bring in each month, and project what your expenses will be.

* Make corrections immediately. If revenues are lower than expected, increase efforts in sales and marketing or look for ways to increase your rates or increase your product or service line. Fire some dead-end clients. If overhead costs are too high, analyze your Income Statement and find a number of ways to cut back. There are other businesses like yours around. What is their secret for operating profitably?

* Think before you spend. When considering any new business expense, including marketing and sales activities, evaluate the increased earnings you expect to bring in against its cost before you proceed to make a purchase. Technology and social media are your friends! Use them to find more business and communicate with your prospects at a substantially reduced cost.

* Remember that lost profits can’t be recovered. When companies compare their projections to their actual figures and find earnings too low or expenses too high, they often conclude, “I’ll make it up later.” The problem is that you really can’t make it up later: every month’s profits that are too low is a month that is gone forever and a month where you are behind on your goals.

* Evaluate the success of your business based on profit, not revenue. It doesn’t matter how many thousands or millions of dollars you are bringing in each month if your expenses are almost as high, or higher. Many high-revenue businesses have gone under for this very reason — don’t be one of them.

Revenues are temporary; Profits are forever™

via LinkedIn at: https://www.linkedin.com/pulse/its-top-bottom-profit-advisor-strategist/