“Revenue is Vanity. Profit is Sanity. Cash is Reality”* this is the wake up call that Matthews Steer Partner Adrian Misiano shared with transport business owners at the 2018 Victorian Transport Association (VTA) State Conference.
Presenting ‘Balance Sheets Matter – a transport business survival toolkit,’ Adrian highlighted the importance of clarity around financial statements, and encouraged conference attendees to think about their future business and personal finances, not just their current business financials.
Drawing on an analogy between a pond whose depth is governed by a tidal river, and a business’ fluctuating profit & loss and balance sheet, Adrian emphasised the importance of business owners capitalising on boom times – or king tides – where some excess trickles over into the pond where it can remain in reserve for less lucrative months or retirement.
“There will always be lean times when business owners need to dip into their ‘pond’ so it’s critical that they have clear insight into the fluctuations of their monthly profit and loss statements so that they spot the opportunities to bolster their reserves in bountiful months,” says Adrian.
The key is to understand what the ratios reveal about the business – the debt to capital management and return on capital management. “Many people think that because they are having to expand they are making money, but in some cases they might be increasing volume rather than increasing wealth. “I want to see business owners look at their balance sheets and really understand whether expansion is going to have a positive impact on their bottom line, and how its going to set them up to sell the business or retire,” says Adrian.
“Improving the value of a business isn’t just about the numbers, it’s about building goodwill through culture, employee longevity and intellectual capital, and customer service.”
Adrian concluded his presentation with a famous quote by Ghandi, highlighting the importance of goodwill and customer service.
“A customer is the most important visitor on our premises, he is not dependent on us. We are dependent on him. He is not an interruption to our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so” - Ghandi
Staged at Mantra Lorne, on the Great Ocean Road, from March 18 to 20, 2018, the VTA State Conference theme was Profit or Perish: Achieving Sustained Success in Transport.
If you would like to speak to Adrian about ways you can structure your transport business to ensure your pond is well protected, and how to improve the value of your business, please either call Adrian on (03) 9325 6300 or email him at email@example.com.