Business Basic – Profit and Cash Flow – Two Business Priorities

Part 1 Profit

Profit should be one of two priority guides in every part of your business planning, even if your business is a non-profit. As a priority guide it must be reviewed daily, weekly, monthly, quarterly and yearly.

A business stays in operation by receiving more value back than the cost to produce what it sells.

The amount of the profit is not relevant; the fact that you must make an accounting profit is. Market conditions, product offering, overhead costs, production costs, quality of management, marketing savvy, lucky breaks and other factors will determine the amount of profit.

We are not talking about profit simply for the sake of making profit. Planning for profit is a commitment and pledge that your business will succeed into future years.

There are always times that business take economic hits. Today’s global environment of volatile energy and raw materials create significant pressure on controlling costs. The habit of planning for profit guide and support the tough choices business must make to survive and thrive.

Every business has core values and focus it strives to accomplish.  Over the course of a business life it will need to; borrow money, require additional investment capital, assure customers of its perpetual existence or any number of other worth based evaluators. Profit is one of key evaluation components.

Customers, who want the best deal possible, still know that if you are not making money, you will not be around to meet their needs. There are customers that have no regard for the value of your business. In assuring the growth and value of your company’s profit, planning can allow you to give up customers that provide no value to your business to focus on those opportunities that do.

Planning for profit is the starting point of business basic. As the business evolves, profit is a key measure of investment worth that validates all the hard work, vision and time invested.

 We want to hear what you think about this topic and questions you need answered for your business.

Rick Williams is an award winning businessman and the managing partner of the business consulting firm ProMMC & ProMMC China.  You can contact Rick Williams at rickwilliams@prommc.com

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