Net Profit In Terms Of Money

When looking at net profits, money is the second of the assets that we must monitor and master. "Time" is the first asset, which you can read more on here. 

I prefer to separate the money that I put into my business in two categories: Expenses and Investments.

First, let’s look at and define our subset consisting of expenses and investments. Expenses are pretty easy to define. They are the basic items we need to run our practice. These are dollars spent to insure that we are able to adhere to the philosophy of Service, Credibility, Integrity and Profitability (SCIP®). 

Expenses are things like rent, telephone, salaries, supplies, fees paid to outside consultants, professional fees, website maintenance, business insurance, health insurance, office equipment and other things of this nature. This seems pretty straight forward but it always bares further investigation. It’s important to reevaluate your vendors at least once per year because the savings through this will increase your net profit. Expense is the biggest factor when you are trying to increase your net profit. Remember: Revenues - Expenses = Net Profit

Let’s look at investments vs. expenses. Investments are costs associated with items that will either maintain or increase your net profit. Some investments must be made just to stay even and keep your flow of income. Others are dollars spent to get to the next level, such as increased advertising, website enhancement, increased direct mail, client appreciation events, new office furniture or a more prestigious location and continual education. What about a new hire dedicated to a new project? What about hiring an intern? How about hiring a public relations person to enhance your position in your community? These are investments. And there is no better place to invest in than your own business. You have the most control in this endeavor.

When considering deficit spending and its possible values, just make sure you have a well thought out plan with the proper strategies and tactics to give you the best chance for success. People engage in “proper” deficit spending everyday. Kids and parents borrow money for college. Cities raise money through bonds to enhance and improve their communities. There are many more examples. 

Money is precious. Make sure you use it properly, for it is usually a finite asset and not never ending. 

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Until next time… good selling!
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Raymond J. Ohlson
Founder & Retired CEO
Ohlson Group
​1-877-844-0900