The problem with being a great operator is you don’t get rich, you get tired
The goal of owning a business is not just to be successful, its to be successful and stay that way
If you want to succeed in business you must learn how to measure your financial results, identify the activities that are sabotaging them, and then learn how to correct those mistakes so that the results you desire can be achieved
Business: measure results, change activities your financial results are simply a numerical reflection of the business decisions and operating activities in your business
Management -> Decisions -> Activities -> Results -> Activities
Activities -> Results = accounting
Results -> Activities = business optics
Financial and business analysis is the process of converting the numbers on the accounting report cards back into activities.
Good management = good numbers; bad management = bad numbers
Business failures in more often the result of bad business owners, not bad businesses.
Primary difference between you and your competitor is you and your team.
Business is an intellectual sport; anyone who plays the game with their emotions, gut and glands gets killed.
Numbers don’t lie
Knowing your financials is what a blood test, MRI or X-ray do for a doctor. Knowing what to measure, what it means and what to do about it is critical.
Using scorecards effectively will answer these questions :
How can I be smarter and more competitive
How can I add more value and make fewer mistakes
How can I rapidly find leaks that are costing me profits and cash flow? How can I get them permanently plugged
How can I take the guesswork out of my decision making and take control of my business and finances
What are the critical drivers I must monitor to optimise and maximise my profits and cash flow
How can I be more efficient with my business prioritisation and activities
How can I move the needle with the least amount of wasted motion
Increasing profit strategy: #[[The Ultimate Blueprint for an Insanely Successful Business]]
Let's take an example of 2 businesses who's goal is to increase sales revenue by 30%. Let's take the example of two businesses taking different strategies for this goal. Both have:
Business A's strategy is to grow the business to achieve this. They increase advertising, build new website, hire new sales team. They put their foot on the accelerator. Revenue increases by 25%, Profits increase 30%
Business B's strategy was increase efficiency. They went through expenses line by line, vendor by vendor. Expenses were cut by 3.5%, profits increased 30%
With a profit margin of 10% every dollar reduction in in expenses equates to a $10 increase in revenue without the need to find, close and work harder to deliver more sales.
No Overhead Growth (NOG) Strategy
how do we grow top-line revenue and maintain or reduce expenses.
Fundamental to optimise before you grow. Scaling a cancerous business simply means you'll have a bigger tumour.