The power that profit has in your business is worth paying attention to. Businesses are in business to create profit, and profit powers the growth of a business. If you are a business owner, you need to focus on the powers of profit and how profit is the key to building wealth for you.
I am passionate about teaching small to medium size business owners how to optimize the profit in their business so that they keep more money in their pocket and increase their net worth.
As a business owner you need to have business financial literacy skills that will help you understand how to create profit in your business. You don’t need to be an accountant or get into the weeds of your accounting records, but you do need to have a high-level understanding of your business finances to make profitable everyday business decisions.
Download the 5-Step Roadmap to a Profitable Biz and get moving on creating that profit in your business.
Passion to profit
Often people say, “do what you love, and the money will come.” While that may be true in the sense that if you are happy with what you are doing then paying customers may be more interested in working with you, it doesn’t mean that you are making money. Good money management skills are the key to making profit in your business.
Why is profit so important for your business?
Profit keeps your business in business. If your business is not making profit, it will cease to exist because profit fuels your cash levels and cash is the lifeline of a business.
PROFIT = Revenue – expenses
Profit creates working capital, which is the money that you have in your bank account. If you are spending more money in your business than you are bringing in, essentially that will bankrupt a business because your bank account will be depleted, and you will have no money to pay your bills.
Profit also fuels growth for your business. If you plan on growing your business, you can self-fund your business by reinvesting the profit earned back into the business on products or services that will help you grow the business.
For example, if you want to increase your advertising costs you can fuel that with profit and you will reach more people with a higher advertising budget who will convert to paying customers.
Profit also fuels debt repayment. If you have borrowed money to start your business or any other purpose, the profit that you make in your business each month can be put towards debt repayment.
Profit can also help build your cash reserves. It’s important to have an emergency fund for your business that will help you through the quiet times in your business when sales are lagging, or when an unexpected expense comes up. Having a cash reserve is smart for business owners as it helps them avoid additional debt and they can keep their business self-sustaining.
Unscramble profit
The best way to unscramble profit is to acquire good money management skills in your business. This may be difficult if you lack business financial literacy, but not impossible. Thankfully there are many resources out there to help you understand what profit is and how to create profit.
Grab your free copy of the 5-Step Roadmap to a Profitable Biz and get moving on creating that profit in your business. This guide is designed to help you identify the areas of business finance that you need to focus on to get that high-level understanding of money management in your business.
The bottom line is that profit power is an important concept in your business. You need to make profitable decisions for your business every day, so having that high level understanding of your business finances will help you be a better business owner. Good business owners understand the financial health of their business and stay involved to ensure they are optimizing the profit in their business.
Creating a profitable business is smart because not only does it increase the financial security of your business, but it increases your wealth as a business owner.
