Bliss Your Profitability Plan:
For more profits, get to the top line
Do you love your business, but feel like you’re constantly grinding for very little reward? Does it feel unsustainable? Do you want to know about improving your profitability? This blog series will help!
I’ve talked with a lot of people who aren’t really sure how profit works. Either their business is pulling in just an okay amount of money or they’re in the red. No matter where you are in your business, you’re probably trying to figure out how to make enough profit so that you can progress toward your dreams.
And I want to help everyone see that progress is possible!
In this series, we’re going to get into some specifics that might be scary. A lot of people want to hide from their money worries. I want to encourage you to take slow deep breaths and do what you need to do to protect your inner peace and also keep reading.
This is going to help, I promise. These ideas are ones I’ve used with my company, and I’ve supported other entrepreneurs in looking at their business this way, too. This series is a complete plan for improving your profitability so that you can have a sustainable relationship with your business.
Reading the financials
It turns out there are two main ways to get bigger profits. Either you do it at the bottom line or the top line. This is accountant-speak for income minus expenses (bottom line) and gross income (top line). The top line is also known as revenue.
When you read your business’s standard financial reports you’ll see whether you’re profiting and what’s causing the most money to move in or out of your business. Custom reporting can help you get clarity on the return on investment you’ve been getting for each of your specific expenses or product/service offerings. A great bookkeeper will help you figure out how to create those customized reports!
It’s important to be confident in the accuracy of your reports so that you can use them to make great business decisions. That means information has to be tracked and categorized — information like money in, money out, time and materials used up, and inventory in and out. QuickBooks Online, Gusto payroll, and any other decent accounting and timekeeping applications that can talk to each other will go a long way to helping with this.
When you make a habit of reading your financials at least once a month, you can get comfortable with finding the story in your numbers. A good tax accountant, business coach, or bookkeeper can walk you through your reports. A mastermind group for entrepreneurs who want to learn more about managing their business finances, such as the group we’ll be running early next year, can also be really helpful in developing this important skill.
The temptation to focus too much on the bottom-line
When we start to look at our expenses, a lot of us tend to automatically focus on how we’re spending “too much” — and then we want to reduce spending to improve our profitability at the bottom line.
We want to reduce expenses first because they tend to feel like things we can easily control. Sometimes they are! The best example of this is the old subscription service that used to be great but isn’t anymore.
If we cut expenses the right way, it can be a fast way to get more cash in the business’s bank account, which makes the company more flexible. Neat!
The thing is, while we do benefit from reviewing expenses now and then, there’s only so much you can cut before your business systems start to suffer. Once that happens, the value of your offered goods/services may drop, your client relationships may get shaky, your revenue may drop, and your profits can decrease.
Rather than perpetually starving your company of the money it needs to function, there’s a better way!
The top line has a bigger impact on your profitability
Looking at the bottom line and reviewing expenses is a good first step to increase your profits. Then it’s time to move on to the top line, which helps us to think about the next steps in improving profitability.
There are a lot of ways to do it! The main question here is, how can your business get more revenue? We’re going to look at that in depth in the next blog post. But first: how are you feeling right now?
This is where a lot of entrepreneurs get nervous or want to avoid. I’ve found it’s important to be aware if something feels too challenging, or if it causes a funny-bad feeling in my stomach. Our emotions and body sensations are trying to give us information. It’s important to honor that by taking care, and by building relationships with people who help us to care for ourselves.
So if the idea of increasing your revenue is causing you difficult thoughts/feelings right now, you might want to go ahead and write that down and thank your body for the information. You can come back to it later, perhaps with the help of a supportive friend, and figure out some ways to take care of yourself around those thoughts and feelings.
One of the reasons that top-line profitability can be scary is that (unlike the expenses) we may feel that our revenue is NOT easy to control. This can be especially true for entrepreneurs who have struggled through months or years of the financial feast or famine cycle.
Getting grounded and clear
Once you are clear that you have reviewed whether your expenses are necessary at this time and that you are ready to think about increasing your revenue, you may still want additional support. The kinds of support you might need include peer support, mindset adjustment, planning, accountability, and community. Consider who is or could be on Team You to help with improving your profitability. We’ll be providing all of these types of support in our mastermind group early next year.
Regardless of how you seek support, this is actually an opportunity for you to go on a learning journey to figure out what ways to make more revenue happen work best for your business. I’ll be posting more about how to increase your revenue soon. I’m excited to tell you!
Bliss Your Money’s services include bookkeeping, bill-pay process setup, payroll setup, profitability consulting, money mindset coaching, teaching, and more! We focus on helping woman- and queer-owned businesses get and stay profitable through metrics and love. Struggling to get on top of your money stuff? Do it with Bliss!