3 Ways to Use Your Financials to Make More Money

You’ve got a good feeling about a new idea, but is it the right investment? 

Where can you tighten the belt without sacrificing quality? 

Sales are steady, but you know your business can do more. 

These types of scenarios keep many entrepreneurs up at night, but the answers are within your grasp. 

Your financial data is a treasure trove of insights, just waiting to be used to make more money. 

Ahoy, mateys! 

In this article, we’ll explore three strategies to transform your finances into some well-deserved bounty for your business.

• Strategy 1: Uncover Untapped Revenue Opportunities
• Strategy 2: Turn Forecasts Into Cash Flow
• Strategy 3: Reduce Waste and Streamline Operations

Let’s dive in! 

Strategy 1: Uncover Untapped Revenue Opportunities

Your financials are a compass for your business, guiding you toward untapped profits. They can reveal hidden gems within your existing operations.

Even small tweaks can result in significant gains. Here are some examples where financials can become your trusty first mate in finding hidden riches:

Shine a light on underperforming products

Sales data can expose product or service lines quietly dragging down your overall profitability. 

Is a specific offering consistently failing to meet sales targets? 

Maybe it’s time to re-evaluate its pricing strategy or consider phasing it out to focus on more promising ventures.

Optimize your pricing

Financial data can help you understand customer behavior and price sensitivity. 

Are you leaving money on the table by undervaluing your products? 

Or are you potentially driving your target customers away with higher prices? 

Your financial data can help reveal the sweet spot – the price point that maximizes both sales volume and profit margins.

Negotiate like a pro

Financial data empowers you to become a stronger negotiator with vendors and suppliers. 

By understanding your cost structure and past purchase history, you can confidently negotiate better deals, squeezing unnecessary expenses and boosting your bottom line.

Strategy 2: Turn Forecasts Into Cash Flow

Using your financials to create forecasts helps you prepare for stormy seas. 

If you’re only working with a budget so far, fear not! You can easily use budgets as a base for your forecast.  

You can also learn more about creating and following a cash forecasting model in this article, where we’ve swapped the pirate analogies for Star Wars, if that’s more your speed.

But forecasting is only half the battle. You must then adjust your sails accordingly, or the effort will be wasted. 

Here are some examples:

Your forecast predicts a surge in sales during the holiday season. 

Instead of investing in a new marketing campaign right now, focus on optimizing your inventory management and staffing levels.

This will ensure you have enough supplies and crew on board to handle the influx of customers and avoid stockouts, which can leave money on the table.

Your forecast predicts a surge in demand for a specific product line.

Reallocate resources from underperforming areas to invest in marketing and production. 

This hidden gem may soon become your most profitable product line.

Your forecast predicts an economic downturn in the coming months. 

Instead of launching a new product line that requires a significant upfront investment, you can focus on tightening your budget.

Renegotiate contracts with suppliers, or offer discounts to boost sales and maintain cash flow during the rough weather.

At New Economy, we re-forecast our financials weekly! It’s a simple process that takes about 15 minutes, where all department leaders discuss and revise based on any material changes we’ve noticed. 

Strategy 3: Reduce Waste and Streamline Operations – Plugging the Leaks in Your Ship

Any captain worth their salt knows even the sturdiest ship can sink from a tiny leak. 

Inefficiencies and waste within your business can be pesky leaks, slowly draining your profits. 

But fear not, matey! 

Financials help you identify and patch those leaks before they become a major catastrophe.

Every penny saved is a penny earned, and financial data empowers you to become a swashbuckling cost-cutter. 

By analyzing your financial statements, you can pinpoint areas where expenses can be minimized or eliminated, ensuring your treasure chest remains overflowing.

• Chart a course for lean operations: Financial data can reveal areas of unnecessary overhead costs. By analyzing expenses, you can identify potential areas for streamlining operations, such as eliminating redundant subscriptions or renegotiating service contracts.
• Mind yer inventory! Inefficient inventory management can lead to overstocking, which ties up your valuable resources. Financials can help optimize your inventory levels, ensuring you have enough supplies on board to meet customer demand without unnecessary stockpiling.
• Embrace the power of automation: Financial data can highlight repetitive tasks that are ripe for automation, causing a drain on your team’s time and energy. Freeing up your crew allows them to focus on higher-value activities. 

3 Key Takeaways

At New Economy, we help you use financials to make more money and better business decisions. 

Here are 3 key takeaways.

1. Unearth Hidden Profits: Financial data is your treasure map, guiding you towards hidden opportunities within your business. By analyzing key metrics like sales data, cost structures, and customer behavior, you can identify areas for increased profitability.
   
2. Chart Course with Forecasts: Financial data empowers you to create forecasts, acting as your compass in uncharted waters. These forecasts help you regularly adjust your sails for stormy seas or fairer weather.
3. Plug the Leaks: Analyze financial statements to pinpoint areas of inefficiency and waste, like unnecessary overhead costs or bloated inventory levels. Every penny saved is a penny earned!

There you have it 🙂

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner. 

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can keep your treasure chests overflowing!