22 | Bed & Breakfast News | Summer 2019
How to increase
profitability
by avoiding
these mistakes
By Jonathan Amponsah CTA FCCA,
The Tax Guys
Cash is King?
“Cash Is King” The danger with following
this mantra is that you start to gauge
the profitability of your business based
on the bank balance. This is a common
mistake I see so often. Here are 7
reasons why your business might actually
be making a loss despite the cash in your
bank account:
• You have not paid your suppliers or
other creditors
• You have received advance cash from
your customers
• You are not paying yourself a
reasonable salary
• You have not taken any reasonable
drawings or dividends
• Payroll expenses have not been
reflected in the accounts
Without a profit there is no business, and
whatever you hope to achieve through
your business will become impossible.
Yet, in my experience, far too many
business owners in the hospitality
industry and elsewhere don’t really
understand profit and how to ensure
they make it.
Let’s review some of the biggest and
most common, profit mistakes and what
to do instead.
• You haven’t made adjustments for all
expenses
• The cash is from last year’s profits
This list isn’t exhaustive but covers the
common areas where your cash goes. So,
the next time your accountant presents
you with accounts with less than
expected profit figure, go through the
above list together with other factors
specific to your business.