Simple Numbers, Straight Talk, Big Profits!
Book

Simple Numbers, Straight Talk, Big Profits!

4 Keys to Unlock Your Business Potential

Greg Crabtree and Beverly Blair Harzog
Greenleaf Book Group, 2011

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Editorial Rating

9

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Recommendation

Certified public accountant Greg Crabtree and business journalist Beverly Blair Harzog outline “four keys” to profitability and challenge American entrepreneurs and small-business owners to rethink their accounting practices. They show why proprietors should pay themselves a market-based salary, earn a pretax profit of at least 10% of revenue and derive the maximum productivity out of every dollar they spend on labor. This book has a strong US focus, especially regarding the US tax system, but interested non-US readers can also garner some tidbits of practical advice. getAbstract recommends this clear and practical treatise to entrepreneurs, small-business owners and financial professionals.

Summary

The “Four Keys” to Profitability

To address the most commonly recurring problems in business, entrepreneurs should learn to manage the four keys to profitability: “the owner’s salary, profit, labor productivity” and “business physics.”

Key 1: The Owner’s Salary

As an entrepreneur, pay yourself a fair market-based salary. Otherwise, your net income figures will be inaccurate, which will distort your financial picture. Your taxes are one of the best indicators of your company’s financial growth. The more tax you pay, the more profit you have earned. If you paid no tax, you either lied to the Internal Revenue Service (IRS) or made no money. Instead of fixating on how much you owe in taxes, focus on building your business, and the numbers will follow.

Check salary websites such as the Economic Research Institute’s salary survey assessor (erieri.com) or Salary.com to learn appropriate compensation levels for your industry. If you can’t afford to pay yourself what you’re worth, you’re creating “sweat equity” instead. Pay your employees a fair salary. If you pay them below average wages, they won’t stay for long. Hire with care. Constantly hiring and training...

About the Authors

Greg Crabtree founded Crabtree, Rowe & Berger, a certified public accounting firm for entrepreneurs, in 1986. Beverly Blair Harzog has written for CNNMoney and FoxBusiness.

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