Financiario’s Post

💡 How does a business deal turn into cash? Let's look at the typical deal flow. It's the Deal vs. Revenue vs. Cash Showdown... ➡ CLOSED DEAL A closed deal is a successful sales transaction in which a customer has committed to a purchase offered by the company. At this stage, the terms and conditions of the sale have been agreed upon, and the customer is legally bound to pay for the product or service. Financial Statement Impact The closed deals have not yet directly impacted the financial statements. They represent the potential future revenue for the company. However, closed deals are essential in forecasting and projecting future revenues. Five ways to optimize deal flow 1. Marketing campaigns 2. Referral programs 3. Partnerships and alliances 4. Networking and events 5. Lead nurturing ➡ Closed deal to revenue At closing the deal, revenue is not immediately recognized on the financial statements. Revenue recognition follows accounting principles, which dictate when and how revenue should be recorded. ➡ REVENUE Revenue is the total amount a company earns from its core business activities over a specific period, such as a month, quarter, or year. It is generated from the sales of goods or services and is a key metric that reflects a company's top-line performance. Financial Statement Impact Revenue is a crucial figure that directly impacts the income statement. However, in many cases, the counterpost to revenue is receivables, signaling that the customer hasn't paid yet. Five ways to optimize revenue 1. Value-based selling 2. Pricing strategies 3. Sales incentives and training 4. Customer retention 5. Sales analytics ➡ Revenue to cash Revenue represents the total amount earned from sales but does not necessarily reflect the actual cash received. The revenue recognized may include sales made on credit, where the customer is given a period to pay the amount owed. ➡ CASH Cash flow is the net amount of cash and cash equivalents that flow in and out of a company. It represents the cash generated from operating, investing, and financing activities. Cash flow is a critical measure of a company's financial health. Financial Statement Impact: Cash flow impacts the cash flow statement. It shows how a company generates and uses cash during the reporting period. Positive cash flow indicates a healthy financial situation. Negative cash flow may signal potential liquidity issues. Five ways to optimize cash flow 1. Accelerate collections 2. Manage inventory efficiently 3. Negotiate favorable terms 4. Discount for early payments 5. Offer subscription services

Difference Between Gross Margins and Revenue:??? 1. Revenue: Definition: Revenue, also known as sales or turnover, refers to the total amount of money generated from selling goods or services before any expenses are deducted. It represents the income earned by a business during a specific period. Formula: \text{Revenue} = \text{Quantity of goods or services sold} \times \text{Selling Price per unit} 2. Gross Margin: Definition: Gross margin (or gross profit margin) refers to the difference between revenue and the cost of goods sold (COGS). It shows how efficiently a company is producing or acquiring goods relative to its sales. Formula: \text{Gross Margin} = \text{Revenue} - \text{COGS} \text{Gross Margin Percentage} = \left( \frac{\text{Gross Margin}}{\text{Revenue}} \right) \times 100 Key Differences: Revenue is the total sales income, while gross margin is the income left after subtracting the cost of producing or acquiring the goods. Revenue is a top-line figure, showing the scale of a business’s sales activity, while gross margin helps assess profitability from core operations (before other expenses like marketing, admin, etc.). --- Important Points to Achieve Business Break-even: To break even in business, the total revenue must equal the total costs, meaning no profit or loss. Here are key points to consider: 1. Understand Fixed and Variable Costs: Fixed Costs: These are costs that do not change with production or sales volume, such as rent, salaries, and utilities. Variable Costs: These costs vary with production volume, like raw materials, direct labor, and shipping. 2. Calculate Break-even Point (BEP): Formula: \text{Break-even Point} = \frac{\text{Fixed Costs}}{\text{Selling Price per unit} - \text{Variable Cost per unit}} 3. Optimize Cost Structure: Reduce Fixed Costs: Lowering rent, overhead, or non-essential costs can help reach break-even sooner. Lower Variable Costs: Find ways to reduce production or acquisition costs, such as negotiating better supplier deals or increasing efficiency. 4. Increase Revenue: Raise Prices: Even a small increase in prices can significantly impact your break-even point. Increase Sales Volume: Expanding your customer base, improving marketing, or upselling existing customers can help boost sales and revenue. Diversify Product Offerings: Adding complementary products can increase overall sales. 5. Monitor Key Financial Ratios: Keep an eye on gross margin, net profit margin, and return on investment (ROI) to track whether you're on the right path toward profitability. 6. Improve Operational Efficiency: Streamlining operations, reducing waste, and improving productivity will help lower both fixed and variable costs. By focusing on reducing costs, increasing efficiency, and boosting sales, you can reach the break-even point faster, and eventually start generating profits. #Lalji

Thinking about selling your business? Don't let market conditions or outdated practices devalue your hard work. Cash flow isn't the only game-changer— you must also consider management quality, customer base, and competitive advantage! Learn how to maximize your sale price in Paul Novak's new blog post. https://lnkd.in/g39p2z7e #BusinessValuation #MaximizeValue #SellSmart

Do you know your lead conversion rate? What about the average payment date from invoice? When it comes to making the most from your business, it's important to know your numbers!

Mastering Return on Sales (ROS) for Business Growth! Uncover the power of Return on Sales (ROS) in assessing operational efficiency and profitability. Learn how this pivotal ratio guides informed decisions and influences sustainable growth. 💼💰 #ReturnOnSales #BusinessGrowth #FinancialHealth #OperationalEfficiency

How I Helped a Client Boost Revenue by $60,000 per month with Pricing Strategy A client came to me struggling with growth. Revenue was stuck, and their pricing didn’t reflect the value they delivered. Here’s the exact strategy we used to fix it: 1. Shifted to Value-Based Pricing - We moved away from charging by the hour. - Instead, we priced services based on the results clients experienced. - This elevated perceived value and boosted average deal size by 25%. 2. Created Tiered Offers - We introduced three service tiers—basic, premium, and VIP. - These tiers made it easier for clients to decide while increasing the likelihood of upsells to premium services. 3. Improved Payment Terms - We required upfront payments and offered small discounts for early payments. - This led to better cash flow and reduced payment delays. 4. Repackaged High-Value Services - We bundled smaller, related services into a premium package. - This simplified the client decision-making process and highlighted the additional value they’d receive, increasing average transaction size. The result? • $120,000 in new revenue within 6 months. • Happier clients who felt they were investing, not just spending. • A more stable, predictable revenue stream. What can you learn? Your pricing strategy is more than numbers. It’s about communicating your value. With the right approach, you can grow revenue without adding extra work. Let’s chat if you want to make your pricing work harder for your business. P.S. What’s one pricing challenge you’ve faced? Share below—I’d love to help!

Learn how accurate rebate calculation can boost your business margins. Discover key steps and solutions for managing rebate programs effectively.

All Revenue Isn’t Good Revenue: Aligning Customer Profiles for Business Success In the pursuit of revenue growth, it's easy to forget a fundamental truth: Not all revenue is good revenue. Taking on misaligned clients can erode your profit margins, overextend your resources, and shift your focus away from your business's strengths. True success lies in attracting and retaining customers who align with your values, pricing, and processes. Here’s a strategic roadmap for mastering customer alignment: 🟢 Know Your Ideal Customer Start with clarity. Identify the clients that align with your business’s strengths, vision, and operational model. High-maintenance or misaligned clients often cost more than they contribute. Use data to define your ideal client profile, considering industries, company sizes, and pain points your business can solve exceptionally well. 🟢 Price for Value Pricing isn’t just a number; it’s a signal of your value. Avoid the trap of underpricing to win business—it creates unrealistic expectations and financial strain. Premium pricing attracts clients who respect your expertise and understand the ROI of working with you. The right customers know the difference between cost and value. 🟢 Say No to the Wrong Fit Saying no is an underrated business strategy. Misaligned clients often force you to create inefficient one-off solutions or deviate from your core processes. Learn to walk away from opportunities that don’t align with your long-term goals or operational model. This makes space for better-fit, profitable clients. 🟢 Prioritize Profitable Growth Not all growth is equal. Misaligned clients can stifle your ability to scale effectively, forcing your team to work harder instead of smarter. Align your operations and marketing efforts to attract clients who fit seamlessly into your processes and enhance your scalability. 🟢 Measure Success Beyond Revenue Revenue alone is not the best measure of success. Evaluate client relationships based on: ·        Profit margins and net contribution. ·        The ease of doing business with them. ·        Long-term partnership potential. By focusing on profitability and alignment, you ensure your business grows in a sustainable, intentional way. To Sum It Up: All money isn’t good money. The clients you serve shape your business’s financial health, operational efficiency, and culture. When you prioritize alignment over volume, you attract the right customers, build lasting relationships, and create a resilient, scalable business. Have you experienced the impact of aligning—or misaligning—with customers? Share your thoughts below! 👇 The Pillar Group can help! #PillarBusinessMasterclass #CustomerAlignment #PricingStrategy #SustainableGrowth #Leadership #PillarInsights

With the new year right around the corner, it’s time for your business to start planning for the future. BBB has tips on how to project sales for the new year and set yourself up for success.

With the new year right around the corner, it’s time for your business to start planning for the future. BBB has tips on how to project sales for the new year and set yourself up for success.