By Rich Bond
How do you know if your business is facing financial friction? Ask yourself these three questions:
- Are your sales growing?
- Are your profits growing?
- Do you know who your most profitable customers are?
If you answer “No” to any of these questions – or worse – to all three, don’t blame the usual suspects: Covid, supply chain, or inflation. The hidden reason is that you are most likely facing “Financial Friction.”
Better financial information can dramatically reduce this friction. Let me explain:
If you’re like most business owners, you know who your largest customers are, but you may not really know who your most profitable customers are.
Too often, your sales efforts can be misdirected toward customers who are not profitable at all. The result is that while your company sales grow, your bottom line does not.
You can change this scenario. Here’s an example:
- My recruiting firm worked with a company that was growing sales more rapidly than profits and was working weekends to fill orders.
- The Controller we helped our client hire pointed out that 30% of the company sales were low-priced, small-quantity orders of generic components, which were very labor intensive to fulfill and generated breakeven results at best.
- By raising the prices for the small quantity orders, company profits doubled, allowing for the hiring of more staff and freeing up more resources to invest in growth and development of new, more profitable proprietary products.
Better financial information resulted in a dramatic reduction in friction and an increase in sales and profits.
I would be happy to set up a 30-minute call to help you assess if your business is facing financial friction and discuss options for become more frictionless. Just message me on LinkedIn https://www.linkedin.com/in/richardrbond/ or email me at Richard.bond@bondandcompany.com.
