Finance

Why your mindset is key to great business profits

- April 27, 2023 3 MIN READ

 

When I ask business owners about their goals, one of the biggest things they tell me is that they want to make more money and grow their wealth. But when I then ask how much time they spend working on this goal, by getting close to the numbers and being super intentional about their expenses and income – I’m often met with silence, writes Clare Wood, money mentor and author of Intentional Profit.

Here’s the thing: if you want to create big profits, you need to create a plan to strive towards future wealth.

For some business owners, spending time and attention on their books doesn’t come naturally. But if you want to truly master your money and unlock a whole new world of potential profits, you need to be intentional in your approach.

6 steps to intentional profit every business should follow

Here’s the steps I take my clients through to get started on this journey.


Step 1: Run your profit and loss reports

Open your accounting program and run your profit and loss report month-by-month for the last year. By generating the report over a 12-month period, you can get an understanding of your sales cycle and notice the slow periods, the busy periods and your actual profit.

Don’t forget to adjust for wages if appropriate. For instance: if your profit runs at $100,000 but you also paid yourself a wage of $150,000, then you actually made $250,000. Also, if you’re not sure how to do this, refer to your accounting software guide or ask your accountant for help.

Step 2: Reflect on results

Are your numbers in line with what you thought they would be? Are you happy with your current profitability? Are there any surprises?

For some, looking at the cold, hard numbers can be confronting, especially if you discover your business isn’t performing as well as you thought. This was the case with one client, who was turning over $1m a year and thought she had a wildly successful business. When we ran these reports and took a closer look, we realised she was just breaking even – and she was able to pay herself less than $1,000 a week (some weeks, nothing at all).


On the other hand, you could be pleasantly surprised when you review your P&L reports and realise you’re actually in really healthy shape.

Whatever these reports show you, the bottom line is you gain valuable access to information – which can empower decisive action in step 3.

Step 3: Update your budget

While your profit and loss has mapped out exactly what you earned and spent in the last 12 months, your budget sets out your expenses for the year ahead.

Refer to your spending and income in the past year to guide your plans for future spending, but keep in mind that it’s just a guide. Just because you made $500,000 last year, doesn’t mean that’s the limit of what you could achieve this year.

Step 4: Schedule regular profit appointments

Set up some regular appointments with yourself to keep these habits up.

Schedule a profit and loss appointment with yourself at the same time every month, and diarise appointments every quarter to check in with your budget to ensure your income and expenses are lining up with your projections. If they’re not, adjust your budget and forecasts so your numbers are accurate.

Step 5: Identify next steps

Work out what goals you want to set and what actions you can take to build on your success from here.

One exercise I often suggest to my clients is to imagine the sky’s the limit when it comes to setting goals. If anything, absolutely ANYTHING, were possible for you and your business … what would you aim for?

With a really big, bold goal in mind, you can work backwards and identify the ‘baby steps’ to get closer to your dream result.

Step 6: Intentionally invest in your own success

Most people need to make some investments in their business to realise their dreams.

For instance, if you want to be the number one go-to provider of your service in your area and you want to consult with big brands and land six-figure deals, then you’re unlikely to attract those types of clients with a cheap/free website. You’ll need to intentionally invest in a bespoke brand campaign to give your business the professional look and feel you need, to attract the clients you want.

Not sure what you should invest in?

Consider this: if you were handed $100,000 ‘no strings attached’ and you had to invest it in your business, what would you spend it on? Write it out and allow yourself to get excited about the possibilities.


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