1st Edition
Ultimate Profit Management Maximizing Profitability as You Grow Your Business
Throughout the author’s career as a banker and business consultant, he has seen many examples of businesses that were doing just “fine.” They were profitable and growing slowly but surely, but then, the business owner decided that it wasn’t enough anymore to simply grow slowly. What was suddenly needed was growth of 20%, 50%, or even 100% per year, just like the notable companies they see and hear about every day in the media. They began to try to grow the business and in a short period, a profitable and thriving business became unprofitable. Since the business was no longer profitable, it needed to take on debt to pay its expenses. After taking on more and more debt, the business reached a point where it could not find any more debt to take on. This circumstance caused the business to fail to pay its bills anymore which led to a financial day of reckoning.
It doesn’t have to be this way. There is a more effective way to grow your business without causing it to become unprofitable. And that’s why the author wrote this book.
Growing a business without making profits usually leads to a short lifespan for that business and there are exceptions such as Uber and DoorDash – but there is a big difference between a business that has outside investors (angel investors, private equity, and venture capital and the typical small business entrepreneur trying to bootstrap a business. The difference is that if a business has a huge target market and it is growing its sales rapidly, outside investors may be willing to fund losses for a period. The same does not apply to an entrepreneur trying to grow a business without outside investors. Losses show that a business is on borrowed time. Once your capital is exhausted, there is no going back. A business needs profits to remain viable and to be able to provide for its owners, its employees, and its community. Running a business that loses money will put you out of business.
There is no reason not to be profitable as you grow your business! The author shares the lessons that were taught to him by leaders, mentors in business, and by his clients. What took him by surprise was that these lessons were not complicated. They’re simple. They use simple, uncomplicated methods to grow their businesses profitably. You will learn about the readily available tools you can use to ensure that your business does not turn unprofitable as you grow it. You’ll be convinced that it makes sense to resist the lure of the high-growth, no-profit strategy and instead embrace the approach of steady growth with profits.
Use this book as a guide. In it, the author covers the most important aspects of reasonable, prudent growth that will avoid debt and allow you, your partners, and business associates a productive and non-stressful existence with a business that grows and profits correctly.
1. Growth philosophy
· Bootstrapping on your own vs. finding investors
· Two separate business models
· Investors look for super high growth potential and controlling interest
· Controlling the pace of growth
· In light of the above, we’ll focus on the bootstrapping method
2. Staffing: Before, during, or after
· If you build it, they might not come!
· Hire slowly and maintain focus on profitability
· The full cost of a hire is like an iceberg: Most is below the surface
· How to get five hats on one head
Note
3. Avoiding the eight growth mistakes
· Setting unreasonable growth goals
· Shiny new toy syndrome impedes your focus
· Not pausing at least monthly to review progress toward goals
· Hiring (and keeping) the wrong people for the job
· Excessive overhead will doom you
· Not enough working capital (cash and/or financing) to fund your growth
· Not talking to your customers about what their needs are (testing the market)
· Underpricing your products or services
Notes
4. The three aspects to profitable growth sales
· More “active" customers (actually buying your goods and services)
· Active customers buying more frequently
· Active customers spending more on each transaction
· Key takeaways
Notes
5. Managing risk
· What is an appropriate rate of growth for my business?
· Grow with less debt; not more debt
· Sometimes building a better mousetrap can be more successful with less risk
· The insurance you need and don’t need
6. Managing your business’s cash cycle
• Calculate your cash cycle
• Payroll and overhead must be paid in cash
• A combined 12-month budget and cash flow forecast gives you plenty of future visibility
• Your ability to retain a portion of your earnings in your business will help you reduce your cash cycle
• A word to the wise: If you’re fortunate enough to qualify for a business line of credit, be careful how you use it. It can be a gift or a curse
Note
7. The five methods to enhance your value while you grow your business
· Do you know what your value is to your client?
· Don't underprice your product/services because you don't have the confidence to ask for your value
· As you make sales to similar size companies, start building your confidence and then dedicate a portion of your sales and marketing efforts to larger companies
· Develop ways to increase the value of your existing products/services to your customers
· Create new, higher-value products and services
· The six secrets to successful price increases
Notes
8. Using technology to reduce costs and boost your productivity
· Web conferencing
· Accounting software
· Email software
· Customer Relationship Management tools
· Project management tools
· Artificial intelligence tools
Notes
9. Valuation is now
· Preparation is key to maximizing value because valuation surprises are a road over a cliff
· Start preparing to increase value NOW for a sale that you expect to close within 24-36 months
· Do not overestimate your business’s valuation
· Put yourself in your buyer’s shoes
· Treat the business like it’s for sale every day
10. Creating legacy
· Whom do you want to be?
· Who inherits, buys, or is gifted the firm?
· Retirement isn’t what you think it is
Biography
Manny Skevofilax is a consultant and speaker who helps business owners to make more money by successfully navigating the challenges of growing their businesses profitably. Since 2003, Manny has achieved extraordinary client outcomes by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team building.
A Baltimore, Maryland native, Manny earned a Bachelor of Science in Business and a Master of Science in Finance from the Merrick School of Business at The University of Baltimore.
Prior to starting his career as a consultant, Manny’s background includes formal bank credit training and service as a Vice President with Comerica Bank, a US-based commercial lending institution. He has corporate lending experience in the continental United States and European markets, specializing in commercial business finance, real estate finance, and large corporate syndicated lending for mergers and acquisitions.
Manny grew up in the restaurant business and made a career change to corporate banking at age 29. When he’s not helping business owners, Manny can be found exploring the ancient ruins on the island of Karpathos where his parents were born.
