Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential

Entrepreneur: My average account in the disaster restoration business was ninety days overdue. That’s one of the reasons I’m not in that business anymore. Greg: In the disaster restoration business, you often encounter disagreements with insurance adjusters, and then the average turnaround on accounts receivable (A/R) is about ninety days. To survi

Assume the following about each example: This is a service-based business that brings in $1.2 million in revenue a year. By the time they take into account federal income taxes and state taxes, their tax rate is 40 percent. The business spends money on its operating costs for a month and then sends invoices at the end of the month. The next month t

Discover where your cash goes (or ask your accountant to help you) by using a format similar to the example at the beginning of the chapter. Set aside your taxes in a separate account on a quarterly basis regardless of when it has to be paid to the tax agencies. Calculate how much cash you need to get your line of credit to zero. Borrow term debt o

Once you go past $1 million, your biggest challenge is getting the required productivity for every dollar you spend on labor. I refer to labor dollars instead of full-time equivalent (FTE) employees, because counting heads does not give you the proper understanding of your true profit model. Focus on your gross profit per labor dollar as your key i

Use regularly updated forecasts instead of budgets. Budgets are a license to spend, forecasts are a license to make profit. Keep your forecast at high level. Detailed forecasts do not encourage regular updating, and they’ll take so much time to maintain that you won’t have time to evaluate them. Evaluate your key metrics to understand the movement

One of the things I do when I sit down with owners of million-dollar businesses is ask them to put the responsible person’s name beside these eight functional areas: CEO: In most cases, the CEO is the owner, but you may want to hire one if you are not the best fit. Sales: Sales management is the key function, more so than who actually does the sell

have tried many different profiles, but I prefer the Caliper Profile from Caliper Human Strategies (www.calipercorp.com).

Whenever possible, I recommend cash-basis accounting because there’s a much tighter correlation between the cash in your hands and paying taxes on that cash. There are a few rare circumstances when it’s better to be on the accrual system, such as a business that gets paid up front for something. But that doesn’t happen very often. Even if your cust

Quick Tips About QuickBooks There are some great features in QuickBooks for producing P&L statements. You can set roll-up points for your key seven or eight lines of data we talked about earlier, then you can expand them for more detail or collapse them to see just those seven or eight lines. First look at the collapsed view across time and see