05 Oct Earning a Second Bag of Money
Every client is carrying two bags of money. The first bag of money you will earn when you perform your services and/or supply your goods to your client.
The second bag of money you can only earn by improving efficiency within your business.
The Profit equation is quite simple: Revenue – Costs = Profit. If you examine this equation, you will notice that in order to increase Profit on the right, you can increase Revenue and you can decrease Costs.
Most businesses focus on increasing sales-which is terrific-and understand that cutting costs is important, but are not sure how to decrease costs other than simply buying supplies for less.
The first rule of reducing costs is tracking what you are currently doing. This requires bookkeeping practices beyond the normal scope of your typical bookkeeping.
Once the correct procedures and items are being tracked, you need to understand how to analyze what is going on with those numbers. This is where managerial accounting comes into play.
Managerial accounting gives you the tools to be able to really diagnose your company and make decisions to help you earn that second bag of money. This is the focus of the posts in the Business Alchemy 101 Series.
Start today to increase your profits by earning that second bag of money and remember…
…without Foundation, your business fails!