Managing the Bottom Line

Managing the Bottom LineIf you don't keep track of how much money you'remaking, you have no idea whether your business issuccessful or not. You can't tell how well yourmarketing is working. And I don't just mean youshould know the amount of your total sales orgross revenue. You need to know what your netprofit is. If you don't, there's no way you canknow how to increase it.If you want your business to be successful, youneed to make a financial plan and check it against

the facts on a monthly basis, then take immediateaction to correct any problems. Here are the stepsyou should take:* Create a financial plan for your business.Estimate how much revenue you expect to bring ineach month, and project what your expenses willbe.* Remember that lost profits can't be recovered.When entrepreneurs compare their projections toreality and find earnings too low or expenses toohigh, they often conclude, \"I'll make it uplater.\" The problem is that you really can't makeit up later: every month profits are too low isa month that is gone forever.* Make adjustments right away. If revenues arelower than expected, increase efforts in salesand marketing or look for ways to increase yourrates. If overhead costs are too high, find waysto cut back. There are other businesses like yoursaround. What is their secret for operatingprofitably?

* Think before you spend. When considering any newbusiness expense, including marketing and salesactivities, evaluate the increased earnings youexpect to bring in against its cost before youproceed to make a purchase.* Evaluate the success of your business based onprofit, not revenue. It doesn't matter how manythousands of dollars you are bringing in eachmonth if your expenses are almost as high, orhigher. Many high-revenue businesses have goneunder for this very reason -- don't be one of them.