Watch Your P&L And Cashflow like a Hawk!

- June 15, 2012 2 MIN READ


Profitable businesses are similar to people who effectively manage their finances, live within their means and adopt a lifestyle that does not create high indebtedness. To maximize profits or minimize losses, a company implements operational philosophies like careful investing, dodging out from excessive or unnecessary spending, employee training and gradual productivity improvement.

In general, there are three ways to maximize profit or minimize company losses.

Increase the top line – Sales

This is probably the best way to maximize profit or minimize losses.  The most effective way to do this is to work as a team or simply increase your prices.  Conduct abrainstorming activity with your sales personnel, who are closer to your market.  Their insights based on their market and customer observation are valuable in developing your sales strategy to achieve higher sales.  Remember to aim high on your sales goals, set a realistic target, but aim to exceed that target.

Reduce administrative charges

Cutting your administrative charges (also known as “selling, general and administrative expenses”) is a good way to increase profit, especially when the company is having a difficulty in increasing its sales. Review your internal policies and procedures and identify procedures that cost money and figure out ways to save some money.  In the long run, your savings from this aspect will help your company achieve financial growth.

Be mindful of your production expenses

Proper management of your production will definitely help you slash your production expenses.  Sum up with ways that will allow you to reduce production costs, but at the same time produce quality products and services.

When a business is losing money, it forces you to watch your P&L like a hawk. It forces you to analyze every line, like it was a line in your epitaph! Just as you’d like your epitaph to reflect well on you, so would you like your P&L. And if it doesn’t, then your P&L may very well be your own personal business epitaph!

Remember, profit does not only dictate company growth.  More than the fact that you are able to enjoy the fruits of hard-earned money, the self fulfillment of being able to contribute to your employees’ quality of life is also at stake.  The higher your company profit is, the higher you can reasonably compensate for your team to help your business flourish.  Giving this reward may also generate positive goodwill with your team. Employees may be willing to work harder and increase their efficiency to achieve more profit for the company. There is nothing more fulfilling than being able to help your team uplift their quality of life through your passion, through what you do.