( read )

Creating a Profit Map

By Sean M. Hugo, CPA

Have you ever sat down and made a map of how your business makes money, also known as a profit map?  If you haven't, I highly recommend that you do this exercise. It is sure to be an enlightening experience. 

Creating a Profit Map

To create a profit map, you break down and put on to the map all your businesses processes.  You are looking to answer the following questions:

  • Can it be done?  If it can't be done what additional capabilities are needed to be able to get it done?
  • Will it be profitable?  So many times business spend considerable time and resources on something that is not profitable.
  • Decision impact? If you make decision how does that affect other operations either upstream or downstream?
  • Operational change? If a process needs to be changed how will the change happen?

Once you have made a profit map of how your business makes money I would put it to the side and ask yourself if you were starting a new business today how would the map be different. 

Comparing Profit Maps

Next, I would make a profit map of your ideal business and compare the profit map of your ideal business to the profit map you created of your existing business.  Then start looking at ways to improve your existing business to more closely look like your ideal business. 

If you need help developing a profit map or improving your profit map give us a call at the office we would be happy to help.