Adding to the bottom line – New Year, new focus
Accounting is not just about compliance. This may come as a surprise to some small business owners, but a good accountant can offer so much more than basic bookkeeping and year-end accounts.
A modern, forward-thinking accountant, such as Comerford Foley, looks beyond those statutory accounts and delves deeper into your business numbers. By drilling down into your key information, and analysing your results, we can provide practical advice, meaningful insights and strategic guidance that will drive your profitability.
In essence, accounting is no longer about just compliance: it’s about helping you make your business profitable.
Are you making a profit or a loss?
Whether you’re a brand new start-up or an established company, there’s one key business-related question that you must know the answer to – is the business making a profit, or a loss?
You’d be surprised how many companies don’t have a clear-cut answer to that question. And it’s even more surprising when you see how straightforward the equation is.
- How much have you brought into the business with sales and other income?
- How much are your combined costs and overheads?
- How much is left in A) when you subtract B)?
That’s an oversimplification, of course – it’s a little more complex than that from an accounting perspective. But that’s the basic question: are you making more in sales than you’re spending in costs.
Knowing whether your business is making a profit or a loss is critical to your entire business plan. It’s the profits that provide the additional funds to take on new staff, move to bigger offices, expand your product range or meet any of the long-term objectives for the company.
And, equally, if you’re making a loss, it’s this cash shortfall that puts a hurdle between you and the growth and prosperity of the business.
Getting real insights from your business information
The key to staying on top of your profitability is to regularly review your monthly management accounts and to have that high-level overview of the entire business.
With the new breed of cloud accounting software, such as Xero online accounting, you have a host of reporting and business information functionality at your fingertips.
Having sat down with your management team to understand the company, we can then produce regular reports that show you exactly where the money is coming into and out of the business – and that’s extremely powerful information when you’re looking to improve your profitability.
It’s important to analyse this business data and to break down the numbers by clients, products and channels to see where you make money or waste time and money.
The 80/20 rule of economics states that 80% of your profits can come from the top 20% of your customers. So it’s extremely important to analyse your data, focus on the right clients and find the answers to some crucial questions around profitability:
- Who are your most profitable customers?
- How much time do you spend on these customers to bring in that profit?
- What are your most popular products and/or services with these customers?
- What are the underlying costs of servicing those customers?
- Where are there opportunities to cut those costs
- Where are there opportunities to upsell more products/services to these customers.
A strategic drive behind your 2016 planning
With the New Year just around the corner, it’s prudent to start planning your strategy for 2016 and beyond.
Armed with a deeper understanding of what makes your business profitable – or where you’re losing money in wasted time or lost revenue – you’re in a far more informed position to create a strategy that will drive profits.
Your business information is the bedrock on which you build a practical sales strategy. So having answers to your core questions on profit and loss gives you the ammunition you need to:
- Focus on the most profitable clients.
- Focus on the most profitable products/services.
- Focus on the most profitable markets/sectors.
In short, your management information gives you the data required to become more targeted, more informed and more strategic with your sales and marketing. And that leads to a greater emphasis on profitability being built into your business model from the ground up.
Find out how we can improve your bottom line
We pride ourselves on delivering the business advice you need, whatever the age or size of your company.
Our years of experience in the Irish marketplace mean we understand exactly what makes a business profitable in this market. We can sit down with you to talk through the long-term goals for the company, your aspirations for your profit forecasts and deliver the guidance you need to make that aspiration a reality.
Contact Laura, our Practice Manager, to arrange your FREE initial consultation with one of our experts. Over a coffee, we’ll get to know you and your business and start the process of increasing your profits.