by Phil Latz
Hi, welcome to the first blog in my finance series that I hope will help you become more successful in your business.
As a business owner myself for many years, I understand the challenges that you face.
Today I’ll be giving you an overview to series two, which is all about maximising your profit.
At last! You might be thinking if you worked through my first series on Personal Growth. Now you’re finally getting into the useful information!
Well… no. If you haven’t worked through my first series, I would recommend that you go back and start there first.
Sure, this new series on Maximising Your Profit contains a lot of useful knowledge. But if you only have knowledge, without the wisdom to apply it appropriately, you keep running up against the same limits. The first series is about wisdom. That’s why I put it first.
So let’s get started on the journey to maximising your profit. Let’s lay some ground rules. Maximising profit is nothing to be ashamed about!
I did not name this series Maximising Your Profit, just as a clickbait strategy.
I’ll never forget the day my favourite teacher, in my favourite subject at high school, said something simple but profound. You won’t be surprised to learn that the subject was economics.
The teacher’s name was Laurie Dennis. He liked a bit of fun and theatricality to make a point.
He started by going around the class and asking everyone, ‘What is the aim of a business?’ He then patiently listened to several minutes of idealistic answers about producing quality products and services, serving customers, providing jobs and whatever else a bunch of teenagers could think of.
After everyone had given their opinion, he stood front and centre and stated forcefully, “The aim of a business is to maximise profit! Full stop!
“If it does not earn a sustainable profit, it won’t stay in business and none of the lovely other things you lot have all talked about will happen anyway!”
You can argue all you like about Silicon Valley start-ups where it seems to be all about growth and market share. And sure, the Americans in particular seem obsessed with growth. But even there, for every company there comes a day of reckoning.
Sooner or later investors run out of patience. In business it’s profit or death.
So how do you maximise your profit? Before we even start to look at your product, marketing, staff and a host of other factors, we need to build a strong financial foundation.
You might find financial statements, spreadsheets, numbers and accounting boring.
I don’t care!
I’ve yet to meet a truly successful businessperson who at the doesn’t have a good feel for the numbers that drive their business. Even if there’s room for improvement in how they measure, record and use those numbers.
In this series we’re going to start with understanding the basics of financial statements, then move on to key performance indicators.
Then I’ll explain some of my favourite business sayings including: ‘Turnover is vanity, profit is sanity and cash is king.’ And.. ‘What gets measured gets improved.’
Next we’ll look at how to put your profit first, followed by five ways to increase your profitability.
Then we’ll dig into a huge profit killer, discounting and the true cost of discounting.
We’ll round of the series with six steps to massive results, how to begin with the end in mind and finally, understanding how to make debt your servant and not your master.
I hope that this blog has given you some useful insights into business and profit.
In the next two blogs in this series I’m going to dive into the scintillating world of financial statements!
I believe that with passion, consistent effort and wise advice you can succeed in your business.
I wish you all the best and I’ll see you next time.