In order to stay in business, you must learn how to sell your products and services at a price that allows you to make the product, pay your people, pay your overhead, and allow you to have money left over to fuel growth thru investment and to pay your shareholders for the risk they are taking for their investment.   Related to the topic of Profitability is Positive Cash flow, which is as important, but no more important, than profitability for keeping the company in business.  Included in this priority are all the numbers associated with the company financial statements.

Profitability Checklist

How would you rank each of the following statements about your organization on a scale of 0 to 10?

  1. We have better than industry average profitability.
  2. We have a well defined budget that we use monthly to better manage the business.
  3. We often discuss how key decisions will impact our profitability.
  4. We have had plenty of cash reserves to allow us to expand as opportunities appear.
  5. Our financial track record has allowed us to develop healthy banking relationships.
  6. We forecast our cash position accurately to minimize any chances of cash flow crunch situations.
  7. We have designed our company intentionally to optimize our profitability and cash flow over the next 3 years.