Jacksonville CPA | Checking Your Labor Costs
Hello everyone and welcome to segment two of today’s podcast. My name is Brandon Mcelroy and I’m the president of Mineva Inc, a Jacksonville based tax and accounting firm with a passion to see small business owners achieve their goals. We were talking about cashflow management in the system called the Mineva method that I use in have recommended to many small business owners well implementing the system. Some people see dramatic results in others, the results only to the effect that they realize that there are problems within their business that needed to be fixed and this system helps them to diagnose problems. For example, taking your business funds and allocating them among separate bank accounts doesn’t change any of the core fundamentals of your business. All it does is use the small plate method, which is a recommended way of dieting or lifestyle change to lose weight. Don’t use a big plate. So typically I know for myself, I eat everything that’s on my plate. If I have a big plate, ate everything on the plate so I have a small plate. I eat everything on the plate, so to eat less food, use a smaller plate. It’s very simple, but for some business owners, for some business owners, they have expenses. They,
they have done a number of things to make sure that they are handling their finances right and they may be working with the Jacksonville CPA or they may maybe working with Neva tax and accounting, nothing has really changed in their business and they still are short of cash. So for people that do not have a spending problem or do not need or it can take a small amount of food and put it on a big plate, this method of managing your cash flow helps you to discover the issues that may be in your business. So every two weeks when you do your allocations, you can see the rhythm of cash as it comes into your business and it will help you to identify the problems. So I’ve seen for some business owners, they have a sales problem. They are not selling enough and not bringing in enough revenue to cover their appropriate monthly expenses. So I would also recommend that you talk to a Jacksonville CPA or Mineva tax and accounting to find out what your monthly hard costs are. So if your monthly hard cost
$20,000, yet only $20,000 is coming, gross is coming into your account before you make your allocations for taxes and savings. Then you know you have a problem. You need to first go through your expenses line by line, an item by item, and try to cut as many nonessential expenses as you can. However, for the majority of people, this will not be enough to make a significant change in their life or business. You need to take a serious look at a few major items in your p and l. number one is your labor costs. Labor productivity is the number one indicator of profitability in your business. So you need to be looking at your labor costs as it relates to your gross revenue on a regular basis, at least every two weeks.
I would recommend for some people every week, getting your labor costs in check is the difference between having a retirement and not having a retirement. I would recommend you sit down with Mineva to map out a plan to fix any issues with Labor, productivity or other expenses that are out of control in your business. Most Jacksonville CPA firms are not working with our customers this way, but with my neighbor, we can help you with these issues that you may be having now. After you’ve gone through your profit and loss and you have cut all the expenses and your labor productivity is at a level that you’re happy with. Next you need to look at your sales and your advertising. Did you need to be spending at least five percent of your gross revenue on advertising? Minimum, no questions asked. If you want to have a viable, profitable business, you need to be spending at least five percent on advertising. So if you bring your gross is 100,000 a year, you need to be spending $5,000 a year in advertising. You’re advertising needs to have at least three avenues or three streams of communication to your customer, so whether this be print, direct mail,
radio or facebook or Google leads or web optimization, Google ad words, I don’t know, a Jacksonville CP out CPA, a Jacksonville CPA out there that is providing this kind of advice as it relates to your finances. I read recently that the difference between a high growth company and a non high growth company is the amount that they spend on advertising. A high growth company spends around 11 percent of their gross revenue on advertising,
so if an. If you’re still short on cash or not, happy with where you are after you’ve cut your expenses and looked at your labor productivity, need to look at your sales and marketing. You’re marketing. The difference between sales and marketing is marketing is the effort that you expend to get your message out there and let customers know who you are and what you do. Sales starts the minute you start talking to them and they they are a lead and you start talking to them and trying to convince them or to close them to work with you or to buy your product or service. So I recommend that you get that. You hire a Jacksonville CPA or Mineva tax and accounting which ever one you think is more qualified to help you with your small business needs. Here at Mineva, we have a passion to make sure that you achieve your goals.