The Bottom Line

The bottom line is that your business needs to make a profit, or it isn’t a business, but a charity — for your customers. At the end of the day, Profit needs to be at the end of the Income Statement. profit is your goal.

Now, you might think that your goal in business is to improve the lives of your customers. Well, you might be able to manage to do that. But, without profits, you won’t do it for very long. Profits are the ultimate goal for any business. Profits are Good. They are essential.

Making the Sale

Profits don’t start with keeping expenses to a minimum. They start with a sale. Something has to be sold before any profits accrue.

So, your number one goal for any given day is to make sales. It doesn’t matter if you are selling a product, or a service, if someone doesn’t “buy” from you, today, you missed your mark.

Now, you might have other things to do throughout the day. Activities like production and accounting keep the wheels on. But, if you ask yourself, “Is this contributing to making a sale?” and say, “No”, then it is time to re-focus.

You make the sale by funneling suspects into qualified prospects, and from there, into paying customers. If you do business online, this means generating enough targeted traffic to your sales pages so someone will click the “Buy” button. It also means writing and re-writing your sales pages so your Conversion Rate improves.

If you do business from a store-front, you still have the same operational goal: attract targeted traffic to come in and look at your merchandise or service.

If you do any kind of in-home or in-office sales, then your phone better be burning up with your out-bound prospecting calls in between the inbound inquiries.

Going to Work

As a business owner, you have great freedom and flexibility. I always loved how flexible my calendar was. I only had to work half-days, and the Best part was that I got to choose which 12-hours that was.

As the owner, you have to be both the boss AND the employee. How good are you as a boss? Do you have exciting plans for your business? Do you have plenty of productive work for your employees to do? Are you able to motivate even the most recalcitrant employee? Do you take good care of both customers and employees?

The larger question is: How good are you as an employee? Do you show up for work on time and ready to work? Do you get the most important work done first? Do you avoid the productivity sink of online browsing? Do you earn 10-times your salary? Do you take good care of the customers? Do you always seek to be a little bit better than last time? Are you a good role model for the other employees? Do you make the boss look good?

The key is for you to remember that your business success rests solely on YOU. You have to make it go. You have to keep it running. If your business fails, it is probably because you weren’t a good boss, or you weren’t a good employee, or both.

Get Focused

Focus on Bottom Line Profits. Focus on Making that Sale. Focus on being the best Boss and best Employee you can be. Focus…

Bookkeeping Keeps Track

With your plan in place, you have to know your progress so you can compare to plan. This measure should be strongly weighted in the direction of finances. Without a strong financial control, your business can go down the proverbial tubes.

The surest way to get into financial trouble is to not keep track of all the financial dealings. This is keeping books. How will you know where you are if you don’t keep books? All the goals and plans are for nothing if you don’t have a bookkeeping process firmly in place.

It’s easy to let this part of business get away from you. The last thing you need is to find yourself trying to catch up after weeks of inattention.

I have one client who keeps track in his head. He hasn’t done any real analysis for 5 years. Is it any wonder he finds himself behind the 8-ball?

Get a Good Start

To start with, bookkeeping or accounting is mysterious and arcane, not to mention generally boring. Way back in my college days, I took the required accounting courses in my business studies. I got A’s. I hated it. I still don’t relish the mundane and routine pounding in of the numbers, but I’ve learned the importance, and I’ve developed the discipline. It begins with getting started.

One of the easiest ways to get started is to head off to the Big Box store nearby and get a copy of QuickBooks. But, spending a bunch of money on a program isn’t necessarily the right way to go about it. You need to understand your accounting needs before you undertake the purchase of systems. Computer programs don’t solve problems. They can make things worse if you don’t have the right ones.

Here is where your Accountant or CPA is of greatest importance. Let them interview you and your business and determine your needs. Let them develop your needed Chart of Accounts. Let them recommend the right way to get started for you. Don’t try to do this analysis and development on your own. Unless you are skilled in the ways of accounting, you’ll just get bogged down and side-tracked from your prime directive – do business.

Keep Up the Momentum

Once you get a set of books established, now, make processing the required entries a routine. Get into the habit of making your entries every day.

You’ll have various sales records to process. Keep track of each sale, each customer, each method of payment. Classify your sales by department or family of transactions. Record the details for later evaluation.

Make the entries in the appropriate journals and programs.

Keep track of every Expense. Keep the Receipts, and make the entries.

Keep your banking records up-to-date. Use your Check Register to record checks and deposits. Record them as you make them.

Make it a habit to keep your entries current. Every day, if necessary, set aside a few minutes to gather all your details into your bookkeeping system. Dong this every day eliminates the mad rush at the end of every month/quarter/year.

Make a Strong Finish

Each month, make the appropriate entries and total them all up. Run your reports to illuminate your Sales, Expenses, Profits, and Net Worth. Compare your progress to your Plan. Make adjustments in business practice.

Reconcile to the Bank Statement each month.

Make your Payroll Tax deposits on time.

Pay your Bills on time.

Each quarter, make reports and compare to plan.

Each year, prepare your tax returns.

Prepare a budget.

Books Are Your Friend

Instead of ignoring or dreading your books, think of them as your trusted ally and friend. They will keep you from trouble if you let them.

Don’t let your business get away from you. Keep your Books in order.

In our online retail business, what we pay for the physical goods we sell, and the shipping to get them to us make up our COGS. Later, when we sell an item, we also charge for shipping & handling, and the actual cost of shipping is COGS.

It only makes sense that we can increase profits if we can get a bit more in sales revenue for an item. It is less obvious, but paying that same bit less for an item will gain the same profits while remaining price-competitive.

Wal-Mart, derided by many for being a community buster, “profits” by keeping their COGS under strict control. They do everything they can to keep that acquisition cost as low as possible.

What are some ways you can keep your acquisition costs low, lower, lowest?

• Don’t pay retail.
• Ask for a bigger discount.
• Pay on time for Invoice discounts.
• Ask for another discount.
• Buy at quantity discounts.
• Sell it all.

From Real Life

My wife, Sandi, & I have been successfully selling online for about 5 years.  Mostly onebay, but our non-eBay store pays for the rent. We specialize in Craft Tools, Blank Journals, and Boxed Greeting Cards.

We make good buys from closeout vendors at a Las Vegas rade show called the ASD/AMD shows.We have one product we’ve been buying directly from the Manufacturer for the past 5 years. We went this year to negotiate a 25% price reduction due to the age of the product.

When we arrived, another customer was going through the merchandise and making offers – and mostly getting approval from the vendor. The customer picked up our product, and we gasped… (He was making offers for the whole stock of each product. We wouldn’t get ANY!) He made an offer of less than half our price, but then decided he couldn’t use as many as were available. He eventually concluded business.

It was our turn, and we began with our #1 product. We offered the same price he had. She accepted! How many? Gee… how about 200? OK. YIPPEE!

She had a newer version, and said we could have it for just a dollar more. How many? 219. OK, we’ll take them…

What a great Buy!

As we left, however, the enormity of this particular buy began to work its way through our practical side. WHAT WERE WE THINKING! We don’t have anyplace to store them. We will need to up our entire marketing effort to move them. Man… WHAT were we thinking???

Well, we are thinking profits. We can continue to sell these at their original price and make plenty of profit. But, they sell slowly. So, we can lower the price, sell more, and still make more profit than before.

THAT’s the  purpose of making a great buy.

By the way, you can see our find, here…  a Generations Rolling Cart.

Conclusion

Buying Right is the key to Profits. Keep those initial costs low.

1. Find a Market
2. Find a Product or Service
3. Sell Lots
4. Control Expenses

Market

This is a pool of potential customers. You know who they are, and you know what they want or need. You can serve a large market, or a niche market. But, you can’t sell to “everyone”.

It helps to have a Market with fewer rather than more competitors.

Product or Service

Your Product or Service needs to be something your Market wants or needs, and something that is different from all the others, You don’t want to be waving the “Me Too” banner too wildly.

Sell a Lot of It

Now, we’re getting somewhere! Selling is where it’s at… Sell a Ton of them and all will be well.

Maybe. Many a going concern collapsed by only focusing on sales.

Control Expenses

This is where Business Success is made or not. Profit is the end goal of any business venture. Without Expense Control, there are not likely to be any Profits. Certainly not as much as could be.

Think of this. Profit equals Sales minus Expenses. A Sale brings related Expenses. Only a portion of a Sales dollar makes it to the Profit bucket. However, Saving a Dollar, or NOT spending one, drops it right to the Bottom Line.

The Bottom Line

The Bottom Line is that the more that you sell AND save, the bigger the Bottom Line.

Watch Your Pennies and the Dollars will take care of themselves.

PR: wait… I: wait… L: wait… LD: wait… I: wait… wait… C: wait… SD: wait…