Here’s what happened with one of my clients, before working with me, Paula thought…that she didn’t need an accounting system because her business was very simple.
That’s what Paula told me when I first met her. And, yes…this was an actual client one of my students came to me for some help. She makes specialty candles on the weekends, which at that time was generating about $700/month profit. Her accounting system couldn’t be easier: add up the weekly sales and subtract the week’s expenses.
When I showed her how to look at her numbers closely, she realized most of her sales were from her least profitable product.
Because these products sold well, she naturally focused on them. But her numbers showed if she spent the same amount of time selling her high profit product, she could triple her income. By knowing her numbers, she went from pocketing $700/month to $2,100/month – for the same amount of work!
Are you losing money on any one product or service and making up for it in other areas? That’s called a “loss leader” and you may wish to choose that strategy, but you should analyze your decision first. After all, if you’re the one making the business decisions, shouldn’t you base these decisions on numbers?