Measure to Manage

Traditional accounting is based on logic, but it does not make sense to many business owners because we are emotional creatures who need some emotion in their lives. That is why traditional accounting methods can be damaging for us.

Traditional accounting has us focus on sales, then direct expenses, and finally indirect ones. So, that is the order of what gets measured the most. It should come as no surprise that many companies are focused primarily on increasing sales while managing costs to maximize profit margins for their businesses without losing out because of poor performance during a rough patch (i.e., dipping profits).

I think it is a good idea to put sales and profit at the top of mind because as humans we are more likely to focus on what is most important. You know how people say, “what gets measured, gets done?” I firmly believe that truth applies in this case. Once you start managing your profits, you will stop the constant scrounging for money for the cool extras in your life like new golf clubs or an expensive vacation or a necessity like a new roof on your home.

This reason alone is why I am a Certified Profit First Professional. Profit First by Mike Michalowicz is a game changer.