Do you really know whether you’re getting the best return from your business?
You may be satisfied by the way your business operates as well as the money you earn from it. But do you really know whether or not you are getting the best return from the investment you’re making?
Don’t just consider the money you’ve invested in the business when answering this question. Or the money you are receiving from it. Consider the time you and your family spend attending to business related tasks. As well as all the other “little” things that eat into your lifestyle.
Why is this important?
The investment you’ve made in your business (money, sweat and possibly tears) is an important part of your overall wealth strategy. It is up there with owning your own home, having money in super for retirement, and holding investments like shares or rental property.
If your business has the right amount of assets generating an appropriate return on those assets, then
- you’re earning the best money (profit) you’re able to earn on that investment
- you’ll have an asset that you can sell to fund another “thing”; like a different investment or to help put towards your retirement
You can have an opinion on whether or not you think the business is doing OK. But to determine if you REALLY are doing well you need to do some analysis.
Optimise your return
You should understand whether or not you’re achieving the best return for all the capital you’ve invested in the business. This is what makes your business good, bad or so-so.
If the cost of running your business is eating into your profit (and cash) without you knowing, then it may be that simple tweaks will earn you more profit (and cash) without requiring you to make massive changes to the status quo.
There are various ways to do this depending on your business. Yes, this step takes a bit of analysis & focussed thought.
It may be:
- analysing “Return On Investment”
- examining performance over time
- bench marking to your industry
Once you have done your analysis, you’ll be able to create options to improve your profitability.
An easy way to get started is to see where the “low hanging fruit” is; that is, what is the simplest, quickest, easiest thing to change which will yield a result that brings you one step closer to your goal.
If you do this process regularly, and implement a simple change each time, then you can make massive improvements to your profitability.
We can help you understand where your business stands.
We can help you compare your unique historical trends as well as comparing your result to the rest of the world.
This is a great basis for discussion around getting the best return for your business.