A business makes (or should make) a profit. Profit is income less expenses. Items are not all cash (apart from obvious things like credit sales and purchases). For example, fixed assets last more than a year, and are generally depreciated over the life of the asset, and the year's depreciation is written off the asset and claimed as an expense. While there's more to it in different areas, profit is at least one of the key goals.

The sad reality is few businesses generate real profits. Income is relatively simple. The main income is from sales (selling goods and services), and then there are various rats and mice such as interest received. It's usually expenses that are the challenge. Expenses can be claimed for anything bought to sell (products, labour, etc), and also for the cost of running the business (rent, insurance, accounting, etc). If an expense contains a mixture of business and private costs, only the business portion can be claimed.

Other costs may not go into accounts for tax, but they should never be overlooked. The cost of funds (interest) for stock, debtors, fixed assets, etc and the return on effort (dividends reflecting the owner's risk) are often not accounted for in closely held businesses. When looking at a business as a whole these should always be born in mind. When it comes to selling a business, the new owner will build these into calculations when deciding what price to pay.

Major books and courses have been (and are being) written about these subjects. This site takes a much more limited focus. It is for business owners struggling daily to do their best, but always fighting fires. If you don't change something, dramatic improvements are unlikely.

We suggest a relatively simple (and yet not easy) approach. While working in the business, your job is also to work on the business. If you don't manage your business (as opposed to managing the various aspects of the business), it will manage your life. Your call.

To simplify this, break the business down into two major parts - external (environment) and internal leadership (vision, strategy, structure and culture) and operating (products and services, finances, systems and process, people and marketing). Given there are hundreds of individual steps in improving your business, it's very easy to get lost in the process. Having a structure and process ensures the daily running of the business doesn't take over from the important aspects.

We use a model called a rocket. It's only a metaphor, but a rocket travelling through space (environment) has many internal components, each of which is crucial to the success of its mission.

Tasks don't have to be done in a particular sequence. That depends on you and your business. Some items will pay significant cash returns quickly. Others will return over longer times. There is no "right way" applicable to all businesses - and the process is never finished.

There is one task short enough to always be done early (for all businesses). It can then be used as a reference point for every other task - vision. If you say that's too "airy-fairy", welcome to the club - but I've never seen the difference it can make. Of course, you can take shortcuts, giving a vision that feels like it came from a cereal box. But a two or three-sentence vision developed for your business alone can change your business. And nothing is set in stone. A vision can be modified (or even replaced as you go), but this should generally be no more often than annually.