By Tyler Garrett, executive assistant to Randy Russon, founder of TOP CFOS
CEOs have a lot on their plate, from managing a business to developing a vision for future growth. Being fully aware of the company’s financials is another item of interest for CEOs, and analyzing those financials is even more important. In fact, companies should perform regular financial analyses because they lead to so many important questions. Critical questions that can be asked after doing a financial analysis include:
- Are we spending too much money in certain areas?
- Which products and services that we offer are the most profitable? Are there some that should be eliminated?
- Is it time to change the prices of our products and services?
- How is our business doing compared to our competition? How do our market shares compare?
- Are there other markets we could enter into to scale up our business?
- Should our workforce be increased or decreased?
Regarding the first question: A few years ago, a small insurance firm moved in next door to our office. One day, the owner approached Randy and asked him to take a look at his financials. Randy was honored to do this for him. (It’s always a thrill to offer our financial insights whenever CEOs and business owners ask for them.) Randy sat down to look at his profit-and-loss statement over the past year. As Randy was reviewing this, he noticed that the owner was spending almost half of every dollar in lead costs. This item was so huge that it was difficult to miss—at least for Randy.
So, when they sat down for a meeting, Randy asked him about this item. He told Randy that he was spending this money so he could gain new clients, but he told Randy that he would do what he could to eliminate the cost. Over the following year, and with Randy’s guidance, he was able to reduce the cost by over $50,000. His net income increased by over $100,000 that year too! This all came about through a simple financial analysis.
This is why financial analyses are so important. Smart CEOs and business owners understand this and welcome those who are trained in doing financial analysis to simply come and take a look.
In our opinion, whenever executive-level decisions need to be made that involve money, no one should move forward without doing a thorough analysis of the financials. Your financials are there for a reason: to serve as a guide in making smart financial decisions. Let your financials be your guiding star, and let us help you interpret that star.
We hope you’ve enjoyed our blog. Remember, TOP CFOS offers the finest CFO services to companies that want to take their businesses to the top. We love being the catalyst behind firms’ soaring profits, and we’d love to be a part of your team. Our contact info can be easily found on our website, so feel free to reach out anytime.
Our next post will come from the Human Capital category and is titled “Employees’ Hidden Value.” Thank you for joining us!
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