Super Hero Method

What keeps you up at night?  Is it how to make payroll or pay your sub-contractors? Or maybe it is how you are going to be in a financial position to embark on that new service offering.  It comes down to management.  Profit management. 

I would like to suggest that there are two methods for managing profit – one not so good and one super hero good.  The first, I am afraid, is the method that business owners use most often.  Bank balance accounting.  This is where business decisions are made based on the available cash in the bank.  The advent of online banking has made this easier than ever.  Login, check the balance.  Then it’s either party mode or panic mode.  A high balance may cause the owner to become overly optimistic and splurge on those things he might not really be able to afford over the long run.  When the balance is low the owner generally doesn’t think strategically but reacts by finding ways to increase income by any means necessary.  Most often this means not paying themselves.  Business owners that don’t get compensated from their business activity build resentment toward the business they started and love and resentment toward their faithful employees who are getting paid.  Not only that but the ideal client becomes anybody with a check book.  Which can result in long term customer relationships that become cringe worthy and tedious.  This is a recipe for death of a business.

 

 

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