It's all about the profits

Being thrifty will pay off for businesses

Like many business owners, I am a creator. I dwell on the creative and that is what makes my business thrive.

Nevertheless, maintaining and, more importantly, growing a profitable business takes more than sheer talent — and in every case, it boils down to the basics of money.

The truth is, there’s more to running a business than monitoring sales, and too many enthusiastic owners focus exclusively on what comes in and ignore what goes out.

Sure, it’s important to look at revenue and every business needs a strategy in place for ensuring long-term growth. But it begins by keeping the spotlight in the right place. Here are four ways to ensure profit remains the focus of your business.

Be persistant,discplined and profit driven

Growing businesses need things, period. But the truth is, it is time consuming and difficult to track profits on every expenditure.

However, getting a handle on where the money is going and why is a smart, proven strategy for financial success. With persistence and discipline, it’s possible to be profit driven. For instance, rather than jumping on board every new idea, take time to think through a business case study to ensure your investment dollars are well spent.

It’s easy to get carried away when a business starts to grow. Many business owners make the mistake of focusing on gross sales.

The problem is, before long, the real profitability of activities is unknown, which jeopardises future growth. And despite expansion, the business loses money over time. Stay vigilant and thrifty when growing your business, it will pay off in the end.

Track income and expenditures

Tracking income and expenditures is a simple piece of advice, yet something that far too many businesses fail to do.

All activity, no matter how insignificant, needs to be logged. Keep a weekly report of total sales and expenses as well as a clear record of monthly activities.

Consider consolidating expenses into categories. It not only helps with organisation, but it provides a clear view of what is eating into the profits. Over the years, I’ve learned the hard way that successful finance isn’t simply a matter of how much you earn, but how much you spend in your business. Be aware, conscientious and keep track.

Plan marketing activities

Planning is the key to moving ahead with your activities. One way to anticipate income is to map out your marketing agenda.

Companies that don’t plan ahead suffer from sporadic income, which results in churning out unnecessary expenses and costs. What do you take into account? Marketing activities, costs, even anticipated revenue.

By keeping tabs on marketing activities three to six months in advance, you can more successfully map out low months and create a strategy for how to get past difficult times. Plus, a clear plan can help you anticipate and identify opportunities for allocating more funds for active months to grow the business.

Keeping a helicopter view of your finances and how your business is expected to grow for the near year keeps you aware, prepared and ahead of the curve financially.

Evaluate activities

The bottom line? There is simply no improvement without evaluation. Take time to review, reflect and revive your business profitability. True, evaluating incomeand profits is clearly not the most exciting activity, but it is a necessity.

Take time off to review the information and make an effort to constantly fine tune incomeand expenses for the future. What types of things should you look out for?

·Large expenses that can be reduced;

·Largest income generators to focus on;

·Elements of the business that are no longer working that can be eliminated; and

·Areas for cost savings (booking in advance to enjoy savings).

Successful, thriving businesses were once start-ups with limited budgets.

Building a robust business begins and ends with a little fiscal “common sense”.

Take a fresh approach by making a conscious effort to be profit driven instead of fixated on gross sales. Be thrifty and track everything — in and out. Finally, plan ahead and get confidence and peace of mind that comes from knowing you’re on your way.

* Pam Siow is the CEO of the digital training company, ThinkSpace. She has helped thousands of companies embrace digital through the Internet.

She is also organising a business event with her mentor, billionaire Anne Mckevitt. Register at www.BusinessThinkDifferent.com to learn more.