Grow Your Business

Do you know where to focus your growth efforts?  Do you know what your break-even point is?  Do you know how your numbers compare to your peers – and not just your revenue numbers?

These are questions that I work on daily with small business owners.  Most business owner’s think in terms of one line item when they try to grow their business – revenue.  This is logical choice.  After all, if revenue is higher, you must be making more money, right?  Wrong.  While this may be the case in a perfect world, it often leads to business owners struggling for years to make ends meet when the mathematics of the business just do not work.  What can be done to fix the problem?  It’s simple.  We just have to change the number so that the math works.

We recently helped a client who had been consistently loosing money for seven years – at a rate over of about $175,000 per year.   When talking with the client, his solution was that he needed more sales.  If he could just get more sales, he would be profitable.    We sat down with him and did a thorough break-even analysis.  Using his current cost structures, it was going to take nearly $3 million in sales for him to breakeven.  He was currently sitting at $700,000.   The answer to his problem was not sales, it was his cost structure.

We looked at his cost structure and compared it with his industry peers and were able to pinpoint a few key area where his cost were out of line.  We then implemented a strategy to fix those key areas.  Within nine months, his business was profitable.

The logical answer to growth is on the revenue line as the ultimate goal in a business is usually to make a profit.  No matter how much you have in revenue though, that does not mean you are profitable.  Make sure you know what your breakeven point is and how your cost compare with your competitors.  Start your goal setting from the bottom line profit and then move upwards to look at what you need to do to reach your target goal.

The next step after getting to or increasing profitability can then be moved toward reinvesting the profit into your business to grow it even further and compound the positive effects.  Stand back, monitor the progress, and let it grow!

Chad is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Chad is also a primary contributor to his firms blog – Beancounter Ramblings You can find our more about Chad by visiting his profile here: Chad Bordeaux