Mind the Gap

As the trains from the Underground in London arrive in the station, you hear the public service announcement "Mind the Gap."

This simple reminder to watch your step between the train and the platform is catchy to my American ear because of the British accent and the unusual phrasing.

So I decided to ask my AI friend, Claude, about catchy phrases for "Take your Profit First."

It suggested, "How about Sort your Profit First or Pocket the Profit First?"

I think the phrasing works, but I'll definitely need to work on converting my southern drawl to a crisp British accent.

For most ecommerce businesses, Q4 is a really important time to tweak your Profit First process, especially to "mind your operating expenses".

As you see your revenue dollars increasing, it's very easy to fall victim to Parkinson's Law.

Fun fact!Parkinson's Law was developed by a British naval historian.

In Q4 you need to need a special strategy to address your seasonality.

I suggest the following for allocating your revenue in November and December.

1 - Use the allocations percentagesfor Inventory, Profit, Owner Pay and Taxes as you normally would.

Then look at your typical OpEx allocation for the prior two months and create a dollar amount allocation similar to prior months.

Once you have completed your allocations, you will likely have more money left in your income account to allocate, because OpEx doesn't fluctuate consistent with revenue swings.

The purpose for this allocation process change is to keep your operating expenses constrained so you don't get sloppy with spending because extra dollars showed up.

2 - For any amount unallocatedin your income account, move that balance to your profit account.

You want to hold these extra dollars in an account so you can address them later.

3 - After year end,take a look at your accounts and determine the best use for those dollars.

Do you have terms or debt for inventory?

Have you set aside enough money for taxes?

Are you planning to launch a new product or grow your sales levels which will require more cash?

The point is to get Parkinson’s law working for you because any resource will expand if not constrained.

If you are concerned that your cash is out of control, let’s talk about how our Cash Accelerator can help you mind the gap between your dollars and direction.

Cyndi

P.S. Ready to take control ofallareas of your business? Our Ecommerce Business Performance Assessment helps you see where cash control may be slipping and where to focus next.