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I’m always surprised by the number of business owners I encounter who do not have any financial statements generated for their business. Or if they do have such records, they never look at them. That is rather like getting on a flight and having no idea what destination you are flying to.

A kitchen design company hired me a few years back because they weren’t profitable, in spite of sales having grown from $80,000 in the first year of operation to $300,000 in year 2. Sales were increasing rapidly. The marketing program was running. So it made no sense that there wasn’t profits. Yet there weren’t any.

When I examined the business what I found was that expenses were way too high and the hourly rate they were charging wasn’t high enough to cover all the new staff hired to meet the sales demand. Invoices were slow going out and payment collection was not consistent. Essentially the owner was running a non-profit without any of the tax benefits. Every time she took on a new client, she was losing money out [Find out more ...]