5 Steps to Continuous Profitability
Profitability is critical for positive cash flow and the cash which funds your business.
Here are my five steps:
1. Clean Books
Garbage in equals garbage out. If you don’t have clean financial statements you can’t make good decisions based on the results. Growing a business without good financial records is a recipe for disaster. Email me if you are serious about cleaning up your books. I can refer you to bookkeepers and CPA’s who can do this for you.
2. Know your overhead cost per unit of revenue.
How do you generate revenue? A car wash generates revenues by the number of cars going through the car wash. A gym by the number of members. Service businesses and construction businesses and accounting firms by the number of billable hours. You need to know how much overhead must be added to each hour you bill before the company makes a profit. This number can be different for different departments or different products.
3. Know your desired net profit per unit of revenue.
How much profit do you want to earn for each unit of revenue? This is a owner decision and affects how you price. It can also range depending seasonality and departments.
4. Job cost.
Once you know your overhead cost per unit of revenue and desired net profit per unit of revenue, look at your revenues to see if the company is earning the desired net profit per hour.
5. Financial review.
Get timely accurate financial statements each month and take 10 minutes to review them. Don’t just look at the bottom line of your profit and loss statement. Look at the trends. Spot minor cash flow, profitability, and productivity issues before they become major crises. You can do this instantly with Financially Fit Business.
These are the five steps to continued profitability and a financially health business.
I cover these steps in detail (with lots of exercises) in my two-day class, Building Profit and Wealth on April 21-22, 2026 in Atlanta. Click here for more information.
How financially fit is your business?
Click here to take this one minute assessment
This Week’s The Financially Fit Business Podcast:
Subtle Changes in Financial Statements – Part 4
In this series I discuss paying attention to subtle changes in profit and loss and balance sheet trends. It’s best to spot them and resolve them before they become major cash flow, productivity, or profitability problems. In Part 4 I discuss the subtle changes in balance sheet current ratio and acid test trends and where to look if they are headed in the wrong direction.
Click below to listen: https://financiallyfitbusinesspodcast.podbean.com/
Books/Audios that could help your business and you!
Blueprints of Success is an easy-to-read book that was written for contractors but is applicable to any small business owner who want to grow their businesses.
You’ll probably recognize some of the mistakes that you’ve made.
Timothy gives suggested implementation actions to avoid these mistakes.
Click here to order on Amazon.
Proven Operations Manuals
- Best Practices to Operate a Profitable Business
- Customizable
- HVAC, plumbing
- Residential and Commercial
Click here to get started.
Financial Statements Matter
Written in English rather than accounting babble, discover what your balance sheets and profit and loss statements are really telling you. Make better business decisions based on accurate, timely financial statements.
For Retail businesses: Click Here
For Service businesses: Click Here
For Home based businesses: Click Here
For HVAC and Plumbing businesses: Click Here
For Irrigation/Landscaping businesses: Click Here
