Today's post is a guest post by RANDY RUSSON, Founder of TOP CFOS | Join him on LinkedIn
So, what do you do if you have a financial problem but don’t know you have a financial problem? This can be a real dilemma, and I’m offering a solution to it. What I’m talking about here is finding the hidden profit center or goldmine in your business.
First of all, I feel honored to be invited to write this guest post by Matt and Joe at Salt Lake City Bookkeeping, LLC. If you are one of their clients, you are in good hands. If you need their services, I would highly recommend becoming one of their clients.
In my work offering CFO Services, I come across hidden profit centers all the time. I literally find thousands upon thousands of dollars that firms could be keeping or earning if they would just follow through upon what I just discovered. This is not just occasionally, but the majority of the time I’m working with firms!
So, what is the solution here? All I can say is, let me take a look. I have this uncanny ability to find hidden profit centers in companies. I also find that other professionals miss these all the time. If there is money to be found in a company, I will usually find it, because this just happens to be one of my talents. I have an eye for numbers.
Now, at the same time, is there a guarantee I will I find a hidden profit center in your business? Of course not, there may not be. All I’m saying is that a majority of the time I will find one through the CFO Services I offer. Perhaps a little story will help.
I was invited to do an analysis of the books of a shoe store one day. This store was owned by a husband and wife and they had been in business over 15 years. They were doing about 1.5 million dollars in gross sales per year, not bad for a one store location. The first thing I did was look back five years to see what was going on with their income statements.
When I look at income statements, I like doing trend analysis, because it really tells me the story of where the company has been and, generally speaking, where they are headed. They had a very healthy sales trend in place that was increasing from year to year. This is what I like to see - so far so good.
Then, I looked at their gross profit over the past five years and noticed they had a spike in 2009. Then, I noticed in that same year that their selling expenses were way below all the other years. At this point, my curiosity was growing for the year 2009. Finally, I then looked at their net income for 2009, and here was the goldmine!
Their net income was over $200,000 after all expenses were paid for this year! The year before and all subsequent years their net income was about half or less than this one particular year. So, I turned to the owner and asked her what happened during 2009. She thought for a minute or two and then the light came on. She said, “Oh, that’s right, my son took over the store that year and was blowing merchandise out the front door the entire year!” He was offering all kinds of discounts to customers on merchandise. Wow, so moving merchandise was the key! I said to her, “Isn’t it about time you repeated this?” She then told me that her husband was the stumbling block, because he wanted to sell everything at full retail. So, she said she had some converting to do.
So, here you have it. I found the hidden profit center in this business - again. Now, isn’t it about time that I found yours? Shoot me over an email at randy@topcfos.com and let’s talk.
Photo Credit: iQoncept/Shutterstock.com
