We are here to help your business be successful
The DIY Profitability Health Check: Find Your Business's Hidden Money
In our last chat, we talked about the recent dip in optimism among Indianapolis business owners and the importance of building resilience. One of the most powerful first steps I mentioned was conducting a “Profitability Health Check.“
I know—the word “profitability” can sound intimidating, like something only for accountants in high-rises. But I’m here to tell you, as a fellow business owner, that it’s simply about getting a clear, honest look at where your money is truly coming from and where it’s going. It’s the difference between just being busy and actually building a profitable, sustainable business right here in Indy.
So, grab a coffee, and let’s walk through this together. No fancy degree required.
Step 1: Gather Your Financial Intel (You Can Do This!)
You can’t see the whole picture without the pieces. Before you get started, gather these documents from the last 3-6 months:
Bank and Credit Card Statements
Profit & Loss (P&L) Report (if you use accounting software like QuickBooks)
A list of all your products or services
Invoices and receipts
Pro Tip: If you don’t have a P&L report, don’t panic. Your bank statements are a great place to start. The goal is to get a snapshot of your financial activity.
Step 2: Interrogate Your Income – Where's the REAL Profit?
This is where we move from “How much did I make?” to “What’s actually making me money?”
List Your Offerings: Write down every product, service, or package you sell.
Calculate Gross Profit Per Item: For each one, subtract the direct costs it takes to deliver it. This includes materials, subcontractor fees, and direct labor.
Formula: Selling Price – Direct Costs = Gross Profit
Rank Your Stars and Underperformers: Now, rank your offerings from highest gross profit to lowest. You might be surprised to find that your best-selling item isn’t your most profitable!
Example: A coffee shop might sell a lot of black coffee (low cost, high profit), but a complicated latte (high milk/syrup cost, more labor) might actually be less profitable despite its higher price.
Step 3: Investigate Your Expenses – Where Are You Leaking Cash?
Now, let’s look at what’s eating away at that hard-earned gross profit.
Categorize Your Spending: Group your expenses into categories like Rent, Marketing, Software Subscriptions, Utilities, etc.
Spot the “Zombie” Expenses: Scrutinize every recurring subscription and expense. Are you paying for a software you never use? A marketing service that isn’t delivering results? These are “zombie” expenses—they’re dead weight, but they keep costing you money.
Ask the Critical Question: For every cost, ask: “Is this expense directly helping me generate revenue or run my business efficiently?” If the answer is no, it’s a candidate for cutting or reducing.
Step 4: Analyze & Take Action – Your "What Now" Plan
You’ve done the detective work. Now, let’s make a simple plan.
Double Down on Your Winners: Focus your marketing and sales efforts on the products and services you identified as your most profitable in Step 2.
Fix, Raise, or Retire Your Losers: For your low-profit offerings, you have a few options:
Increase the price to reflect its true cost.
Reduce the direct costs if possible.
Stop offering it and focus your energy elsewhere.
Cut the Fat: Cancel those unused subscriptions and negotiate better rates with suppliers. Every dollar saved here goes straight to your bottom line.
You've Done the Health Check... Now What?
Completing this DIY checkup is a huge accomplishment. It puts you in control and gives you a clear map for immediate improvement.
But what if you did the checkup and felt overwhelmed by what you found? What if your books are a mess, making it impossible to even start Step 1? Or what if you see the path forward but don’t have the time to manage it all yourself while still running your business?
This is exactly where I can help. As an Indianapolis business owner myself, I know that your passion is serving your customers, not getting lost in spreadsheets. My expertise in bookkeeping and financial management is designed to give you that clarity without the stress.
I can help you:
Set up or clean up your QuickBooks so your financial data is accurate and easy to understand.
Provide ongoing bookkeeping to ensure your profitability health is always monitorable.
Offer strategic advice on how to use your newfound financial clarity to make confident growth decisions.
You started your business to make an impact. Let me help you ensure it’s also a financial success.
Ready to stop guessing and start growing with confidence? Contact me today for a free consultation, and let’s build a profitable foundation for your business together.