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Profit Planning Process

Posted by Sorge CPA Posted on May 24 2016

Every business needs to be analyzed carefully in order to both grow and maintain growth successfully. Here at Sorge CPA we offer to help you plan in a way that allows you to expect greater profit margins and overall business health. The profit planning process should be done after tax season to allow for a clear understanding of what is happening within the business. Here is our process.

Review the income statement and balance sheet. This helps to determine the gross profit margin and overhead costs.

Calculate sales needed to reach net income goals. Using the historical information allows us to create appropriate sales goals for you.

State the sales goal. This can be in annual or monthly terms depending on the type of business and the seasonal sales that may occur.

Analyze the gross profit margin for potential improvement. Based on historical income and cost relationships we analyze the gross profit margin in terms of improvement. Profit margin improvement is possible when unique core differentiators are identified and communicated to your customers in a way that they will understand the value of your product or service.

Consider line by line potential improvements. This is done by going through your balance sheet and income statement to see what changes could be made to improve profitability.

We consider profit improvement strategies and the investment required in order to implement these strategies. Is there a better way of completing a task(s) within your business? We can go over potential investments for your business and how they could help you profit more in the future.

Tasks are then assigned with deadlines. Ideally, profit planning sessions will occur multiple times a year in order to assess your business.

We want your profit margins to continue to grow year-round.Planning for this allows it to be an expectation rather than a variable.