Monday, February 12, 2018
Maintaining a Financially Healthy Company
Gathering financial and service analytics about your company is key to assessing what is working and what should be changed. Business owners must have a working idea of what is profitable in order to maintain a healthy company and continued growth.
An essential step to determining company health is to research all your services and determine their part in your company’s future. Categorize your services into tiers or types to give yourself an overview of what is working and what isn’t.
Assess your Services
The Most Commonly Requested Service
Keep track of the most commonly requested service that your company provides and why people initially contact your company. This service may not be the most profitable, but it can be valuable as a marketing and client-intake process.
Once clients know your name and the way you provide business, you can offer them your other services as they are in need. Your most commonly requested service can prove to be the most effective service overall and should be kept in most cases.
The Most Expensive Service
Even if you are only occasionally hired for your most expensive service, it may prove to be of great value. Initially, people may seem hesitant to purchase your most expensive or largest package of services due to the price tag. However, that doesn’t necessarily mean that you should reduce the price. If you are still getting occasional business from your most expensive service, then it can still be of value to your company. This service will also show which clients are willing to spend extra money for something of value.
Take into consideration the money and effort spent to maintain this service, such as training, licensing, gear, upkeep, and operations. Make sure that you are getting enough business to cover these upfront costs.
The Most Problematic Service
Do you have a service that causes more stress than what it’s worth? It’s important to note service problems such as chargebacks, complaints, and difficulty. Assess the time that you spend rectifying issues since these are all a part of this service’s value.
However, your most problematic service doesn’t necessarily need to be cut. Instead of immediately discontinuing this service, look for solutions to improve the product. Happy clients recognize progress, improvements, and stress-free experiences.
The Least Profitable Service
Sometimes services don’t prove to be as valuable as initially hoped and the operating costs are being covered by your other services. Unless there is a marketing effort or delayed payment turnaround, you may be financially required to discontinue this service.
You should be aware of the operating costs of each of your services and make sure that they can support themselves.
The Largest ROI
Small overhead costs and big rewards? If you’ve found this sweet spot, be sure to promote this service to all your clients. Even if the return on investment seems small, it can still be your most profitable. Meaning, if a service only costs you $5 to perform and you get $55 back, that is an extra $50 in your pocket. $50 may seem like a small payout for one service, but if you provide this service enough, it can make all the difference in the end.
Tips to Assess Company Finances and Potential Growth Opportunities
There’s no time like the present. Start collecting and organizing company data today and in months or even weeks you will start to see patterns. If you are intimidated by what seems like a large project, put aside one or two hours each week to gather and organize your company’s financial information.
Use Your Existing Software
Many accounting software programs have built-in analytics tools, like Quickbooks or Chargify. If you are already organizing your service charges by labeling them, you can easily separate what each service is earning.
If you are managing your business with outdated software or techniques, consider upgrading to a digital platform with an analytic assessment. Doing so may not only provide you with more insights but improve your daily operations and save you time.
Balance your Books
Create categories in your budget to get a big-picture idea of where your business is spending money. Get ahead by using tax forms to assess your costs since this is paperwork that you will already have to complete.
If you properly assess your company’s profits, you can accurately raise or lower the cost of your services, or restructure your services to cover all aspects that go into a typical case. Doing so may cause some painful introspective into your company’s finer operations, but it will be worth it in the end when your company is cost-efficient.