F. A. Q

Frequently Asked Questions

What is a virtual CFO?

The virtual CFO is a way for small businesses to get CFO support that they wouldn't have been able to afford previously.

Small businesses that hire a virtual CFO get access to an experienced financial professional at a fraction of the cost of a full-time CFO. The services will differ from firm to firm, but usually a virtual CFO will:

• handle all the duties of a traditional CFO, but work remotely and on a part-time basis

• monitor the financial health and well-being of the business, usually with cloud technology

• offer financial insight and guidance on all company decisions and issues

• provide back-office functions such as managing accounts ledgers, depending on the client and their needs

Information from https://www.xero.com/us/accountant-bookkeeper-guides/become-virtual-cfo/

 

What are the advantages for small businesses?

Having access to a virtual CFO can be a big benefit for a small business. Most of them can't afford an experienced, knowledgeable CFO on a full-time basis and may never consider hiring one.

That's a problem, because many small businesses fail within the first three years. Reasons include failure to set themselves apart from the competition, and an inability to find a profitable business model. With an accounting professional acting as their virtual CFO, they could keep their financial goals and realities clearly in sight.

A virtual CFO is an affordable alternative to hiring a full-time CFO and can make a big difference to a small business, by:

• creating budgets and forecasts

• pinpointing problem spending by highlighting trends in the market

• validating or discouraging business decisions with financial well-being in mind

These are abilities that the vast majority of business owners don't possess – but they often need them in order to succeed.

With a combination of practice knowledge, cloud-based accounting software, mobile technology and modern data analytics, you can provide virtual CFO services that will be of great benefit to your clients.

Information from https://www.xero.com/us/accountant-bookkeeper-guides/become-virtual-cfo/

 

How can I make my business profitable?

Steps to improve profit

The measures you put in place to improve your profit should align with your overall business goals and objectives. These should be set out in your business plan.

Prepare a budget

Preparing a budget will help you identify how your profit strategies can contribute to your business plan.

For example, if you've decided to increase your sales you may need to hire extra staff, purchase more stock or undertake marketing activities.

You will need to prepare a budget that shows not only increased profits, but the increased expenses you'll need to factor in to achieve the increase in profit margin.

Focus on your profit margins

Profit margins are used to determine the profitability of your business. Your profit margin shows whether the average mark-up on your products or services is enough to cover your direct expenses and make a profit.

Your gross profit and net profit are most commonly used to work out profit margins.

Calculate gross profit margin

Gross profit margin = (Gross profit / Total revenue) × 100

 

Review your business's bottom line performance

Generating consistent profits is a key sign of a healthy business. However, decreasing gross and net profit margins can signal challenges in areas such as pricing, sales and costs.

 

Benchmark your business's performance

Profit margins and ratios can be used to compare your business's performance with industry averages. It's important that you compare performance within your sector as profit margins vary widely across different industries. Learn how to measure performance and set targets.

 

Assess the effectiveness of cost management measures

Rising costs in areas such as materials, utilities, rent, marketing and staffing will have a significant impact on your profit margins. Understanding your costs—especially where they are rising—is essential. This will allow you to put more efficient processes and supply arrangements in place to maximise profits. Learn how to reduce business costs to increase profits.

 

 

Evaluate business productivity

Productivity can be increased through efficient business processes to build healthy profit margins. Work with your staff to analyse your operational and financial processes to identify ways of increasing efficiency and productivity.

Develop new business strategies

If you want to generate higher profit margins, you may need to develop new business strategies. Consider what target markets you'd like to appeal to, and how your existing products and services could be marketed to them. You may be able to change your products and services to better meet the needs of your most profitable customers.

Reduce your error rate

Reducing the amount of damaged or unsellable products during your production process will help increase your sales and your profits. The error rate ratio will help you evaluate the quality of your production and whether the cost of producing your goods is too high.

A high number may indicate you need to look at your production processes. For example, your goal might be to achieve an error rate of less than 1% (i.e. less than 10 items rejected in 1,000 produced).

Formula: Error rate ratio = (total items rejected ÷ total items produced) × 100

Understanding profit drivers

Profit drivers are the internal and external factors that affect your business's bottom line. Understanding your profit drivers and how they affect your business is key to developing effective strategies to improve your profits.

Trading accounts and profit and loss statements usually contain information on profit drivers for a particular business. Identifying and focusing on the profit drivers in your business can help maximise your profits and achieve better growth results.

 

Profit drivers can be categorised as financial and non-financial.

Financial profit drivers

Financial profit drivers are directly associated with dollar figures and are considered the most common in relation to profit. Examples include:

• price

• fixed costs

• variable costs

• sales volume

• cost of debt

• inventory.

A financial profit driver ratio may be expressed as a:

 

• number (e.g. average number of sales per month)

• dollar figure (e.g. the average sale per customer)

• percentage (e.g. percentage of customers who are repeat business).

Non-financial profit drivers

Non-financial profit drivers also impact your bottom line but aren't expressed in dollar terms. For example, customer satisfaction will always impact the number of goods sold and increase or decrease profit.

 

Non-financial profit drivers include:

• productivity

• customer satisfaction

• quality of the product or service

• training of employees

• employee satisfaction and morale

• business culture and values

• product and process innovation

• market share

• employee safety.

Ranking your profit drivers

Consider your profit drivers and identify why they're important to the success of your business. This will help you rank your profit drivers from most important to least important.

 

The top profit drivers common to most businesses include:

• increasing sales (turnover)

• improving gross profit by either increasing price or reducing input costs

• reducing overhead expenses by improving efficiency.

This can be accomplished in several ways. For example, you could improve the quality of your product for a similar price and set the sale price higher, reduce overheads by improving inventory management, and increase repeat business by improving customer satisfaction.

Measuring profit drivers

Keep track of your profit drivers and regularly measure their impact to evaluate the success of your strategies.

Use these ratios and calculators to measure and monitor your profit drivers.

Strategies to increase sales revenue

• Find new customers—new customers can help grow your business.

• Develop new product lines—ask your customers about what new products or services they are interested in.

• Focus on your most profitable customers—it may be more profitable to sell fewer products to higher spending customers than to focus on increasing sales volume alone.

• Work with your best customers—find out who your best customers are, what they buy and when they buy it. You can use this information to market and advertise to them more effectively.

• Up-sell and cross sell—persuade your customers of the benefits of your more profitable products and pitch additional products.

• Find new markets—use market research to see if there are opportunities to expand into new areas.

• Customer service—improve your customer service and develop a staff training program.

• Increase your prices—review the prices of products regularly and adjust accordingly. You may increase a small amount at a time.

• Price discounts—consider price discounts and promotions to increase your customer base (e.g. 2-for-1 deals or happy hour).

• Increase productivity of your staff—recognise and reward staff with staff performance reviews. Regularly upskill and educate staff with training.

• Retail displays—use effective retail displays to increase sales.

Strategies to decrease costs

• Decrease inventory—use stock control to streamline your business and improve profit and cash flow. The less money you have tied up in slow-moving inventory the more profit you can make.

• Decrease direct costs—build relationships with the right suppliers for your business and negotiate better process or discounts for buying in bulk. Don't make unnecessary purchases.

• Decrease indirect costs—minimise waste, train staff to be efficient and use low-cost marketing techniques.

• Decrease overheads—save money in areas like energy consumption and find cheaper suppliers.

• Remove unprofitable products and services—concentrate on popular products or services with the highest gross profit margin.

Benchmark key financials—benchmark your business to compare your costs (like rent and utilities, etc.) to similar businesses in your industry.

Information from https://www.business.qld.gov.au/running-business/finance/improve-performance/profit

 

 

HOW TO MAKE A PROFIT IN BUSINESS

Businesses large and small have the same goal: reliable profits. Those just starting out have a few extra considerations as they build the foundation required to grow their business sustainably.

 

1. UNDERSTAND FINANCIALS

Before you can answer that question, you need to understand what it really means to make a profit. The money you bring into your company is considered revenue – and you don’t get to put all of that in the bank. Once you pay for costs including payroll, taxes, supplies and other expenses, what’s left over is your profit margin. This is the real number that will determine if you stay in business, experience explosive growth or have to close your doors. 

 

You also need a basic knowledge of financial terms and the ability to read financial statements. You wouldn’t fly a plane without knowing how to read the gauges – and the same applies to business. You can’t tell if you’re winning or losing if you don’t understand the controls. Being able to read a balance sheet, income statement and cash flow statement means you’ll be able to participate fully in conversations about how to make a profit.

 

2. CREATE A BUSINESS MAP

You won’t be able to get where you’re going if you don’t have a map to get there. Every successful business starts with a plan – or even better, a business map. A business map is more than a way to get from point A to point B. It incorporates different scenarios so that you’re ready for anything, then connects it all back to your overarching company vision.

 

Your business map will include a plan for how to make a profit. What can you do today, this week or this month to start improving your quality of profit ratio? Working with a business coach can also be an invaluable tool in this stage as they’ve helped countless others create a plan that is sustainable and scalable.

 

 3. SET REALISTIC GOALS

With any new venture, it’s easy to start thinking about the end goal. Today, you’re opening your business; tomorrow, you want to make $10 million. If you think this way – in terms of creating a profitable business through massive growth from the get-go – you’ll miss out on opportunities along the way and quickly become overwhelmed.

 

Instead, think in terms of incremental growth. Set SMART goals – Specific, Measurable, Achievable, Realistic and anchored within a Time Frame – and focus on improving your processes and systems and steadily increasing profits over time. Everything in life that’s worthwhile takes work. Don’t be distracted by “quick fixes” or get caught up in a competitive race. Focus on long-term growth and what’s right for your business.

 

 4. IDENTIFY WHAT’S HOLDING YOU BACK

As you’re wondering how to make a profit, you must take an objective look at your entire organization. What’s currently preventing you from making the money you know you’re capable of earning? Is it a lack of viable leadership skills? Is it a problem with your sales team? Have you not spent enough time getting the word out about your brand?

 

The problem could also be something within you: Are you emotionally holding on to something that’s limiting your company’s growth? Have you held on to limiting beliefs? Once you’ve identified what is holding you back from your plan to increase profit, you can seek out the personal or professional tools needed to break through your barriers.

 

 5. HIRE RIGHT

Tony always says to focus on your strengths, and hire for your weaknesses. Identify your own personal strengths and learn how to leverage them in leadership. Then identify your weaknesses and determine who you need to hire to fill those gaps. Perhaps you need an accountant or bookkeeper, or an incredible sales team.

You also want to hire raving fan employees. Who supports you 100%? Who not only knows the company inside and out, but can also rally the troops and bring in new customers? When you assemble a team of people who are excited to work for your brand and spread the message, it becomes much easier to be successful.

 

Finally, think about how you can better retain your existing employees. Do you need to hire fresh talent? Do you need to offer more benefits or make changes to the company culture? Do you need to invest more in your employees’ well-being? Find the right mix of leadership, inspiration and incentives, and you’ll find the key to how to make aprofit in business.

 

 6. ADD REAL VALUE FOR YOUR CUSTOMERS

How do businesses make money? The most important answer is that they always add real value for their customers. The bottom line for how to make a profit isn’t actually a number – it’s the value customers perceive in the business’ product. When someone finds a product that fills a need they can’t find anywhere else, they fall in love.

 

How do you truly add value your ideal customer can’t ignore? Prioritize your market research to understand your customer’s lifestyle and taste. By inhabiting your customer’s mind and preferences, you’re able to create compelling innovations customized to your market. As you innovate, track how your buyer responds so you can adjust your strategy as needed.

 

 7. FOCUS ON STRATEGIC INNOVATION

There aren’t many companies who can say they honestly offer their customers something brand new. Those that do are true disruptors, but that doesn’t mean you have to be that type of company to increase profit. At this point, successful businesses expand on existing ideas, but they do it in a way that’s useful and appealing to their customers. In other words, they strategically innovate. To do this, you need to identify who your customer really is and why they need your product or service.

An example of a strategic innovator is Netflix. Before the streaming service came along, people were happy to rent tapes at Blockbuster. Netflix saw how they could capitalize on this need for home entertainment, and found a way to make movies even more accessible for their target audience.

Netflix not only found a way to make a profit, but also a way to change the entire entertainment industry. If you’re able to do this, you’ll be leagues ahead of your competitors and can expect your profit margins to rise accordingly.

 

8. LEVERAGE YOUR CONNECTIONS

Running a profitable business requires far more than just number-crunching and managerial savvy. Like most of life, business success hinges on many factors, and building connections is one of them. Look at your network not as a collection of individuals, but as a collection of strategic alliances.

 

Build relationships with complementary businesses in your industry, and consider partnering with them for referrals. By learning to leverage your connections, you increase your scope and ability to make a profit. 

 

9. CUSTOMIZE YOUR CUSTOMER ENGAGEMENT STRATEGIES

Understanding how to make a profit means taking a close look at how you’re engaging your target market. There is no one-size-fits-all sales or marketing strategy, and you must customize yours to fit your product and clientele.

 

Given modern technology and the popularity of social media, for many products, outreach is about immediacy. Engage your target market digitally through your website and social media so they can easily access and learn about your product. You might consider adding interactive tools like webinars and demos to attract customers.

To make a profit, think outside the box about your product. You might need to cross-sell (provide new products or services that complement your existing ones, like a gym selling supplements), or adopt a sales model that creates returning customers (e.g. monthly service plans or bulk discounts). Whatever approach you take, measure your results to determine what tactics are working and which ones aren’t.

 

10. TAKE MASSIVE ACTION

Once you’ve figured out what’s holding you back, how to grow and how to strategically innovate, it’s time to get to work and make your plan for how to make a profit. Create a timeline and develop a series of steps you and your team will take to increase profit margin.

 

Then make a massive action plan that will help you jumpstart growth and increase profit at your business. Maybe this involves creating a new department, launching a new marketing campaign or undergoing leadership training so you’re better equipped to lead your company. Whatever you need to do, make sure it’s included in your plan and that you have concrete, achievable goals for your company.

 

11. TRACK YOUR PROGRESS

Just because you’ve created an action plan doesn’t mean your choices are set in stone. Monitor your results as your plan progresses. Have you figured out how to make a profit in a sustainable way? Set times that you’ll check in with your team and reevaluate your progress. Maybe this is a monthly thing, or perhaps you check in every three or six months to monitor growth.

 

Tracking your progress allows you to evaluate what’s working and what isn’t, refine your strategies for making a profit and gather feedback from your employees. If you’re consistently missing your goals, is it because they aren’t realistic? Or because you’re focusing on the wrong areas? If you’re achieving your goals easily, you can ramp up your goal-setting – and your profits.

Information from https://www.tonyrobbins.com/career-business/make-a-profit/

 

How to increase profits in your business?

10 Tips To Increase Profits In Your Business

A general rule in your financial success in business is that you cannot increase profits directly, only indirectly.  You cannot just say that you are going to increase profits of your business without some specific strategy.

The only thing that you can do to increase profits is to improve the variables that ultimately determine your level of profitability. When you improve these 10 variables about your business you will increase profits and affect your bottom line.

1) Lead Generation

The process that you use to attract interested prospects to your business. If five out of ten prospects who come into your place of business end up buying from you and you can increase the number of people coming in from ten to 15, you can make more money and increase profits by 50 percent.

 

2) Lead Conversion

The process by which you convert leads into paying customers. This is the measure of the effectiveness of your sales efforts. If you can increase your conversion rate from one out of ten to two out of ten, you can double your sales and increase profits.

Improving your ability to sell and convert interested prospects into paying customers is one of the most important things you can do. And there is no replacement for ongoing sales training, both for you and for every single person who speaks to customers, either live or on the phone.

Look at every key result area in your sales process and seek ways to improve a little bit in each area. A small improvement in each key area can lead to an enormous improvement in overall sales results.

 

3) Number Of Transactions

The number of individual sales that you make to each customer that you acquire. By increasing the frequency of purchase by ten percent, you increase your sales and increase profits by the same percentage. What are some things that you could do to get your customers to buy more from you and to buy more frequently?

 

4) Size Of Transaction

The size of the sale and the profit that you earn from each. You should be continually looking for ways to up-sell each customer so that he or she buys more each time.

 

5) Profit Margin Per Sale

Profit margin is the gross profit that you make from the sale of each product or service. By continually seeking ways to raise the price or to lower the cost of the product or service without decreasing the quality, you can increase profits per sale.

Every dollar you raise a price, if you hold costs constant, flows straight to the bottom line as profit. Every dollar you reduce expenses, if you hold sales and revenues constant, also goes straight to the bottom line as net profit.

 

6) Cost Of Customer Acquisition

The amount that you have to pay to acquire each paying customer. You should be continually seeking creative ways to improve your advertising and promotion so that it costs you less to buy each customer. This can impact and increase profits of your business dramatically.

 

7) Increasing Customer Referrals

The customers who come to you as the result of referrals from your satisfied customers. Developing one or more proven referral systems for your business can have an inordinate impact on your sales and your business will make more money.

 

8) Eliminate Costly Services And Activities

Many companies get into a routine or rhythm of offering expensive services to their customers that they could easily discontinue with no loss of customer satisfaction.

Look at the little services that you offer to your customers. Is there anything that you could reduce or discontinue altogether?

 

9) Reduce Your Break-Even Point

This is the number of items that you must sell each month to break-even or start making a profit. You use this break-even point to evaluate the potential effectiveness of any advertising or any other expense that you incur to increase sales. Every expense to increase profits must be seen as an investment with an expected rate of return that is greater than the cost.

 

10) Raise Your Prices

In many situations, you can raise your prices by 5 or 10 percent without experiencing any market resistance. If your products and services are of good quality and your people are friendly and helpful, a small increase in your overall prices will not drive your customers away.

Information from https://www.briantracy.com/blog/financial-success/10-tips-to-increase-profits-in-your-business-make-more-money/

 

What services does AethairionCFO offer?

In a nutshell, we offer a range of services from the standard tax based bookkeeping accounting, to financial coaching to CFO consulting. This includes setting up a management information system, validating the data and presenting the course of the company to the Directors or CEO. Cash flow controlling and budgeting may also be included. Moreover, we may also offer credit controlling and collections services.

Depending on your company’s course we will adjust our services accordingly. Your success, having enough profits and cash flow to distribute dividends without ruining the financial foundations of the company, is our success as well!