Owning an integration business can be lucrative, but could your profit figure be masking some major room for improvement in the performance and finances of your business?
What if an average-to-good profit could be turned into an amazing profit? How to break down your profit number?
Most integrators we talk to have at least two or three different segments of the business that can easily be identified. These could be broken down by geographical areas, residential vs. commercial, and so on.
Once you have identified the segments of your business, you then need to ensure the regular financial reports that you look at to drive your business decisions are broken down into those segments. How do you do this?
Your financial reports will only be useful to you once the data behind the reports is accurate and segmented properly. This is a three-step process:
1) First, you need to break down the account codes or categories in your accounting software to accurately reflect the different segments of your business,
2) Then, ensure that your regular bookkeeping records your income and expenses as per these categories, and,
3) Configure your financial reports to be meaningful to you.
Data + Structure = Information
Information + Knowledge = Intelligence
Intelligence + Experience = Insight
Without this insight, you may look at your overall profit for the year and think you are doing great. But what if one segment of the business is very profitable and masking the other underperforming segments? How much better could you have done knowing this information and taking action to address this?
About the author: Luke Desmond is the CEO and Founder of Crisp Accountancy, a UK firm that helps smart home and AV businesses.