Angie Noll, owner of Reconciled Solutions, is a Certified Profit First Advisor with an MBA from Loyola (Chicago). She believes that the traditional accounting principles of Sales minus expenses equals profit should be flipped to Sales minus profit equals expenses. Noll helps businesses set themselves up for permanent profitability by focusing on profit first. This approach allows small-business owners to prioritize profit and make informed financial decisions.
To achieve permanent profitability, small-business owners can ask themselves key questions such as reverse-engineering how much they need to sell to support their lifestyle, understanding their financials, identifying how much they are paying themselves, measuring the results of leveraged spending, ensuring everything is accounted for clearly, and setting goals for every dollar in the business. These steps can help businesses increase revenue, decrease costs, and improve overall profitability.
One important aspect of setting up an accounting system for permanent profitability is ensuring that every dollar has a purpose and place in the business. By setting financial goals, creating a plan to achieve them, and measuring progress along the way, businesses can maintain financial discipline and ensure that essential expenses are covered. This may involve organizing finances into multiple bank accounts and making repeatable allocation transfers based on preset target percentages.
Another crucial aspect is adapting the tech stack to sync properly with the accounting system. Technical proficiency is necessary to avoid issues such as date format mismatches that can result in inaccurate financial data. It is also important to ensure that financial reports are timely and accurate to make informed decisions and prevent cash crunches.
To beat the odds of business failure, small-business owners should trust their numbers, accounting processes, and communication with their accounting team. Working closely with a bookkeeper who possesses technical skills, consultative skills, and aligns with the company’s values and goals can help businesses stay on track and proactively address financial issues. By prioritizing profit and having a close eye on spending, businesses can set themselves up for long-term success.
The information provided in this article is not investment, tax, or financial advice, and readers should consult with a licensed professional for advice concerning their specific situation. The Forbes Business Council, of which Angie Noll is a member, is a leading organization for business owners and leaders seeking growth opportunities and networking. Small-business owners can benefit from joining the Forbes Business Council to connect with other industry professionals and gain valuable insights for their businesses.
