Bob Gauvreau gives a short, practical guide to identifying and addressing financial challenges in a small business. He emphasizes keeping bookkeeping up to date and accurate, then reviewing a profit-and-loss picture over time—focusing on gross profit margin trends, total overhead costs, and bottom-line profit.
Chapters
How to identify and address financial challenges in your business. You want to make sure that you're identifying any situations that are maybe arising in your business. It all comes down to the foundation of making sure your numbers are up to date and accurate. If your bookkeeping is not up to date and accurate, you have no idea how your business is performing. And one of the ways that I like to look at a business and their up to date financial statements is to look at a picture of a profit and loss over a period of time. And what you can look at is one, your profit margin. If gross profit is continuing to drop, that's when you're having issues that could turn into long term issues inside your business. We want to make sure that your profit margin is continuously maintained if not going up. The second is looking at our overhead costs, the total overhead costs at the bottom, which is a summary of all of those expenses. Lastly is looking at the bottom line profit in the business, which is once you understand your gross profit and your overhead cost, it's purely a volume gain.
