top of page

Principles for Healthy Business Finances – Make a Profit

My fifth principle for healthy business finances is to make sure that whatever your business does, you make a profit.

I know it’s not rocket science and we are all aware that businesses that make a loss cannot survive for very long. This has only recently been demonstrated by the collapse of well-known retailers such as Arcadia, Debenhams, Laura Ashley and Oasis. To be fair the pandemic has hastened their demise, but the writing had been on the wall for a long time.

As a privately owned company, Brunsdon Financial has had to manage the issue of profitability over the years. A particular pressure point came after changes were made by the Financial Conduct Authority from 2016 to the way in which we could apply charges for our services (primarily in relation to commission). We had to look carefully at our fees and costs to make sure that we continued to stay viable as a business.

Indeed, one of the most fundamental questions any business has to ask itself is how much to charge for its products and services.

At a coaching course I attended a while back, a delegate asked the question: “How do you avoid going bankrupt?” This raised a few eyebrows in the room as the answer seemed obvious: “Watch your cash flow,” “Don’t run out of money!” and “Stay in touch with your customers” were amongst the suggestions given by others in the room. However, to me the most brilliant answer came from someone who said simply: “Know the exact cost of your product or service and overheads and add a percentage for your profit.”

In my view, there are three key principles that businesses can apply to increase their chances of making a profit:

  1. Believe in your product or service and charge a realistic price for it Always remember that clients will pay for excellent and relevant products and efficient, fairly priced services.

  2. Low inflation doesn’t mean no inflation Be prepared to raise your prices every year in line with inflation. Don’t be tempted to absorb inflationary increases as this will inevitably whittle away your profit.

  3. Perhaps the most basic principle of all… Make sure you have more money coming in than you have going out Cash flow really is king.

bottom of page