The power…Financial statements…

The power… of magnetism

Of course we know that high grade stainless steel isn’t magnetic. But if we consider the almost irresistible attraction that stainless dishmachine has on our prospecting attention, you’d think both that it was, and that we all carry a super powerful rare earth magnet in our back pocket!

And while we’re right to focus on selling that part of the business (since it represents more than 60% of foodservice chemical purchases) it may not always be the best place to start.

That’s especially true when we don’t have any evidence of a real need in that area. What’s more, that change means effort and risk. So most prospects are disinclined to make that major decision in the absence of a pretty strong benefit. That makes it a fairly tough sell.

So, maybe the place to start might be elsewhere – like that not so clean and maybe slippery quarry tile floor. Making that minor decision is a lot less daunting for that buyer. And making that floor more surefooted is almost certainly of personal interest to that chef or kitchen manager.

Assuming you make that smaller sale, you have your foot in the door. But perhaps even more importantly you’ve created an opportunity to establish your bona fides. Remember today you’re an unknown quantity. After you deliver that promised clean, sure footed floor, you’re becoming credible.

Financial statements… made easy(er)

None of us are bean counters and for most defining a debit versus a credit is kind of like explaining brain surgery. But accounting minutia aside, we do need to understand a profit and loss statement if we want our businesses to succeed.

In its most basic form the P&L begins with gross sales. That’s just the total of what was invoiced for the prior month. After that number comes the cost of sales. That’s simply the total cost of the goods that were billed in those invoices. The difference between those two is the gross profit.

After that step normally the businesses’ selling expenses (to include salaries, commissions, any health or retirement benefits, etc.) are detailed and sub-totaled. Then come what are called general and administrative expenses (or G&A). That category might include the cost of vehicles and their operating costs, any rental costs, depreciation expenses and pretty much anything else the business had to pay for that month.

Finally the total of those costs is summed up and subtracted from the gross profit. What’s left is the net profit. Pretty much the only expense left after that is Uncle Sam’s cut!

Next up: Decoding the balance sheet.