Accomplished by A Weekly Profit Comparison
Have you ever been shocked when preparing your year-end financial paperwork and you find that profits were not what you expected?
You had, what you thought, was a good year. You were busy and working hard all year long. This was an unexpected and disappointing surprise. What happened?
There is so much required to operate a business and it’s hard to keep everything balanced. There are three support columns that hold up a company and financial health is a crucial part of one of them. If you neglect to regularly monitor finances, by the time you realize it, that support leg may be too weak to keep the company stable.
It’s easy to lose track of things if you aren’t intentional.
Profit and loss reports are easy to prepare, especially if you use a computer bookkeeping program. The problem I had with the profit and loss report was that it didn’t answer questions that I wanted answered, not without doing a lot of extra work. We all struggle with not having enough time to get everything done so, it gets put off and the next thing you know the year’s over.
Been there done that. That’s why I developed a Profit Comparison report.
I wanted, at a glance, to know if we were on target for the current year’s financial goals. This way adjustments could be made before the financial support leg got too weak. I also wanted to be able to see how the company’s income and expenses compared with last week or last year at any time throughout the year.
The Profit Comparison is an Excel spreadsheet that within a few minutes can be filled out and ready for review. We take information from a standard profit loss report, enter it into the proper places on the spreadsheet and with a few clicks of the mouse it lets us see what the “profit pulse” is. By filling it out and reviewing it every week we can stop bleeding before it becomes fatal.
The Profit Comparison report provides:
- Comparison of the current Gross Profit to last week, last year and this year’s goal.
- Comparison of the current Overhead Expenses to last week, last year and this year’s goal.
- Comparison of the current Net Profit to last week, last year and this year’s goal.
- Revenue deficiencies or surpluses, providing an opportunity to make necessary adjustments to get and stay on target.
- Job cost overruns, providing an opportunity to make necessary adjustments to get and stay on target.
- Excessive overhead expenses, providing an opportunity to make necessary adjustments to get and stay on target.
One of the biggest problems that businesses struggle with is the lack of time to get everything done, this is especially true for small to medium size companies. Financial reports are one of those things that get put off because they aren’t “directly connected” to generating revenue.
This simple report can easily provide the “profit pulse of your company” weekly.
We are working on developing this Profit Comparison Report complete with instructions into a product available for use by others. If you or someone you know would be interested in this, please let us know in the comments below.