Most business owners look at their P&L and see two big buckets and one small one: Revenue and Expenses and if they are doing it right, Profit.
The problem? When you lump everything together, you can’t see the truth. You might have a service that brings in huge revenue but has razor-thin margins, while a smaller product is a profit powerhouse.
The Fix:
- Categorize: Stop lumping. Set up QuickBooks to track specific product and service lines.
- Analyze: Look at profit on a dollar basis (cash in bank) and a percentage basis (efficiency). They are rarely the same.
- Optimize: Once you know the numbers, you & your frontline team knows exactly what to do.
Diving deep into profitability is something we do in our ActionBOARD meetings. The next ones are March 20th & April 3rd.