The drive for profitability
Author: Russell SmithAugust 28, 2012
Most business owners want growth in their business. Few just want to tick over. Many business owners are sales people and nearly all sales people want more revenue.
The classic mistake that business owners who are sales people make is they think that business growth is revenue growth. It isn’t. Business growth is profit growth or at the least, capital value growth. Revenue growth just means you are receiving more cash but if you are just paying the cash out in expenses you are effectively a bank with money passing through.
Sometimes for entrepreneurs, the drive for profit doesn’t come easy. Because when you think about it, if profit increase doesn’t necessarily mean sales increase it can then leave all the non-interesting stuff such as systems, efficiency reports, timesheets, cost control. This is the stuff that we as accountants love but business owners may not want to get involved in.
For those clients who are on our business support service, they will be well used to this drive for profitability. It can take time, but it pays off in the end.