Why Use Real Company Data When Making Financial Decisions?

11 January, 2013

When analyzing your business in order to make sound financial decisions there are many accounting software packages you can use that simulate business situations. Many of these accounting software packages use boiler templates to show results instead of using real company data. For instance, using a boiler template you can determine if your revenues are $1,000,000 dollars and you increase sales revenue by 10 %, it would result in an additional $100,000 dollars. If your typical margins are 30 %, in theory, there is an additional $30,000 generated on the bottom line. The problem is that these software packages fail to take into account your selling costs, administrative costs and other overheads that may occur in creating an extra 10% increase in revenue. They don’t necessarily extrapolate back to the real impact to cash flow. That is why I recommend using a company’s real numbers. With a company’s real data our Profits Plus System will literally show actual results. For instance, what would be the real result on cash flow if you reduced your inventory by 1%? Using real data we can review the key areas and identify where the most opportunities exist to have a real tangible impact on the business.  Then work together to extrapolate tangible plans that the business owner is comfortable with and see what results they can drive out of the business.
Quite often one of the biggest problems companies in a high-growth mode encounter is that although their revenues are growing well and the profits are looking very good, they’re actually maxing out their line of credit. The banks are starting to say there is no more lending facility.  I’ve have seen situations where a company is facing closure because the banks have stopped lending and the company was literally about to fail. They ramped up revenue and profits but all of a sudden the banks have said there’s no more lending available. The business owner is confused and does not know how to move forward.
Business owners, in the hopes of strengthening the income statement often sacrifice the balance sheet. To a banker the balance sheet is critical. Using the Profit Plus System we marry the two together so you can see what you’re doing to the bottom line, what you’re doing for tax purposes and how much cash will be left over. By using profit plus I’m really focused on wealth creation. I personally define wealth to be a combination of profit and cash. That is what makes a healthy business and a happy banker.
Your business is too important to leave to templates and guesswork. Get Real Results from real data. Call Numbers Plus today 289 290 3322 and ask for a health check up of your business using our Profits Plus System.


Leave A Comment