Bottom Line

Archive

Expense or Investment?

Category: Bottom Line

Stop! Before you buy that must-have gadget or supply for your office I challenge you to pause and decide whether it is an expense or an investment. It makes no difference whether you are about to purchase a new mini-iPad, hire a company to upgrade your website, or renew your newspaper subscription. The size or cost of the purchase is immaterial; the tangibility of the acquisition is irrelevant. What matters is that you are about to spend money and you have no idea whether it is an expense or an investment.

 

What is the difference between an expense and an investment? At a very basic level the answer is:

Read more

Leading Indicators

Category: Bottom Line

Leading indicators must lead to financial results. If they don’t then they are not good leading indicators. It’s that simple.

 

Before we go deeper and discuss why this is simple, though not always easy nor used, let’s look at what a leading indicator is versus a lagging indicator.

Read more

Be Strategically Flexible

Category: Bottom Line

You can be too flexible. Take it from me. I know from personal experience.

 

I have been blessed, or cursed, with a flexibility that exceeds that of the average person. As a result I have had 6 sprained ankles, a broken ankle, and innumerable twists and near misses. When I went to physical therapy after the broken ankle, the therapists affectionately nicknamed me Gumby. And their parting words were: “It’s not if you will sprain or break your ankle again, it’s when.”

 

Nice huh?

Read more

Do You Hate Bookkeeping?

Category: Bottom Line

I once saw a TD Bank survey where small business owners ranked bookkeeping as their number one most hated task in running their business. In fact, 46% of the small business owners surveyed responded negatively to bookkeeping. Coming in second was a tie at 22% of small business owners indicating banking and marketing.

Read more

Churning Cash

Category: Bottom Line

Recently we discovered that one of our larger customers was not as profitable as we thought. They were making our gross revenue number look good, but were adding very little to our gross profit. In other words, we were churning cash.

 

In conversations with small business owners, we have discovered that many small businesses fall into the same trap. They take on customers that buy a lot, frequently pay quickly, but add very little to the profitability of the company. These customers are initially attractive because of the cash flow they create. Unfortunately, in many cases for every $1 that is brought in, $0.99 goes right back out. Thus the phrase: churning cash.

Read more

Show Me the Money

Category: Bottom Line

In the 1996 movie, Jerry Maguire, there is a scene where the two main characters scream at each other: “Show! Me! The! Money!” This is a key scene and a rite of passage for Jerry Maguire. In small business, show me the money is also a key concept.

Read more