Money in the Bank Account does NOT mean your Company is Profitable

By Talmar Anderson

Originally posted August 24, 2012

As part of my conversation when speaking with very smart, successful business owners, I usually ask if they are profitable.  “Absolutely” is the answer.

Great!  Really glad to hear it.

How do you know? “Well ,I’ve paid all my bills and there is still money in the bank.”

Sooooo…that is good BUT that is not necessarily profitable. The next question I ask, once I get that “What chu talkin’ about Willis” look is how they measure the time to produce their deliverables.  Which usually leads to the question of whether they are counting the time to land the client?  Which leads to the time to generate a lead…..and well, you probably see where this is going.

Money in the bank is good but if we are able to measure that a deliverable you are charging at a rate of 3 billable hours actually takes 12 hours in total, what does that do to your profitability? Significantly affects it, correct?  The knowledge that comes with measuring your true turnaround empowers you to make informed decisions on scheduling (helping with time management), give realistic delivery times (Helping with customer satisfaction) and often times justifies higher rates (builds profitability).  So how profitable are you, really?


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