Can Your Income Statement Can Make You Money?
There are two secrets your Income Statement knows about how you can make more money. You can make more income or you can pay less expenses. And the tips to doing that are on your Income Statement.
When it comes to making more money, then are three primary ways to do that:
Sell more to existing clients and customers, Increase the number of existing clients and customers, or Increase the frequency of sales.
Here are some tips:
Determine the lifetime value of your clients. (QuickBooks can do this if you’re tracking by customer/client.)
What can you do to improve the number? The slightest difference can make a big impact on your bottomline.
Identify which products have the highest gross profit. (This should be tracked through your Accounting System design as well.)
Identify which products have the lowest gross profit.
Now, what can you do to make them all better? Increase the sales price, decrease the expenses?
** NOTE: Make sure your bookkeeper is properly separating direct expenses and indirect expenses. If this isn’t done correctly, your gross profit will be off.
Which are the winners and which are the losers for your business? This could be based on location, departments and/or products. All of this should be set up in advance in your accounting system.
It’s a simple rule, but one that is very powerful: Ride the winners. Lose the losers.
What other things do your customers want and need that wouldn’t cost much money for you to provide? It could be contacts, more information, a different way to access your products and services.
Now, look at your fixed costs. These are the costs that stay the same no matter how much you sell. They rarely add value or income to your business. What can you do to turn your expenses into investments?
For example:
You have to file a tax return every year. You could hire a EA or CPA to put the numbers on a form. Done that way, your tax return is just a report.
Or you could hire a CPA who is also a Tax Strategist, hopefully before the year is over, to look for ways to decrease your taxes. Your CPA/Tax Strategist will also prepare your return, but first she’s looking for ways to save you taxes. Then the tax return becomes a report of your tax strategy.
The same is true of your bookkeeper. You can use a bookkeeper to prepare your financial statements so you can file your tax returns. That’s an expense Or you could get financial statements each and every month so you can make informed business decisions. That’s an investment.
If you are looking for ways to cut costs now is the perfect time to contact us! Please email Richard Richard@USTaxAid.com at 888-592-4769.
Tags:
