A Profitable Business Is Directly Proportional To Your Ability To Take Charge Of The Money

Posted on June 7, 2016 by Lioness Staff

A Profitable Business Is Directly Proportional To Your Ability To Take Charge Of The Money - Lioness MagazineYour decision to build a profitable business is directly proportional to your ability to take charge of the money. Taking control of your money is a commitment to take responsibility for all of the following financial disciplines:

  • Developing a realistic budget and operating the business within it
  • Understanding how the timing of revenues and expenses affects cash flow
  • Keeping a stranglehold on salaries and operating expenses
  • Retaining your earnings for reinvestment as a first priority

Develop the discipline to generate and review simple financial reports and budgets on a daily basis until you achieve breakeven. Thereafter, continue with this financial discipline on a weekly basis until you achieve ongoing profitability and hire a qualified financial officer that you can trust. Besides sleeping better at night, you will gain a clear understanding of the rhythm and flow of your revenues and expenses and their impact on your operating budget.

During my company’s (USI’s) first three years of operation, I knew where every dollar of revenue came from and where every dollar was spent. I reviewed make-shift financial reports every single night and made judgments about budgets every day. We started out with the one-write checkbook system, quickly shifted to Excel to generate budgets and financial reports, and later migrated to QuickBooks as our primary financial management system. Throughout the life of USI, I always stayed very close to the money, and I was very cautious about extending trust when it came to the money. As a result, I was never surprised and slept peacefully most nights.

Ed McLaughlin is the author of the upcoming book, The Purpose Is Profit: The Truth about Starting and Building Your Own Business, along with co-authors Wyn Lydecker and Paul McLaughlin. The Purpose Is Profit (Greenleaf Book Group) will be available in bookstores on August 2, 2016.

Preorder the book here.

Download a complimentary excerpt, “The Ten Commandments of Startup Profit,” here.

Connect with Ed on LinkedIn here. His email is Ed@ThePurposeIsProfit.com

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