You can be running a family business for generations and still not feel satisfied with how much your business is earning. Yes, it pays the bills, and it puts food on the table. However, one would expect more from running a family-owned enterprise – especially if it has been handed down from generation to generation.
If you’re feeling disheartened or demotivated about how things are recent with your family business, you’ve stumbled upon the right article today. Maybe today, you’ll finally be able to figure out why money seems to keep escaping from your business.
Ever heard of money leaks?
Have you ever tried collecting water with a damaged bucket? The kind that has been eaten up by rust, so there are little holes poked in the bottom. No matter how much you try to fill the bucket with water, you can’t seem to do so because some keep leaking through the holes in the bottom. The bigger these holes are, the faster the water drains through.
The same phenomenon may be happening to your business.
The reason why you feel discouraged, maybe even frustrated, with your business’s earnings maybe because you never really got the chance to appreciate how much you’re making. Your profits could be leaking out before you can even get your hands on them. This is a common problem faced by many businesses – and something we, as Profit First professionals, try to address.
Money leaks are often the reason why your business isn’t seeing enough returns. It is also the main target of the Profit First method. If you’re running a 6-figure business but end up taking home less than a salaryman’s minimum wage, then money leaks are most likely present in your family’s business as well.
If you want to really benefit and experience the money your business is making, take more home for the use of the family, you first need to plug up these money leaks. These leaks are literally draining profits from your company for no good reason, and the sooner they get resolved, the more satisfying your take home will be.
The best way to counter money leaks is to apply the Profit First method in your business. The Profit First approach was first mentioned in a book of the same name written by Mike Michalowicz. It’s a step-by-step process that aims to minimize wasteful spending in a business to maximize profits. Annette & Co.’s very own Annette Ferguson is the only Chartered Accountant to be certified as a Profit First Professional in the UK.
The method starts with identifying money leaks in the business by reviewing financial records.
Once identified, these “leaks” are assessed for the value they bring to the business. Are these leaks not worth keeping around, or will the business suffer if they’re to be removed?
By identifying what goes and what stays, you can begin “decluttering” your unproductive spending, resulting in greater take-home pay.
This is just one of the many things Profit First can introduce to your family business to help you safeguard the money you earn better. Feeling satisfied and rewarded by how much money you get to take home for the family can give you the motivation to keep on working hard every day. It can even lead to increased business productivity.
For more information about Profit First and how it can apply to your business specifically, you can book a consultation with Annette & Co. for FREE. You can also follow us on any of our social media channels for daily news, updates, and tips to run your business!