The full title of this book by Bob Fifer is
“Double Your Profits in Six Months or Less: 78 Ways To Cut Costs, Increase Sales & Dramatically Improve Your Bottom Line“.
In my review at Amazon.co.uk, I gave the book a rating of Four Stars. This means it is good to very good.
You may think you focus on profit but after reading this book, the new you is going to be much more focused
Who should read a book about doubling profits?
Pretty much every business owner because running a more profitable company gives you the chance to be more innovative for customers and a better employer for the people who are good at their jobs. In contrast, a struggling business is constantly juggling costs and forced to make hard decisions.
This book is copyrighted in 1993 so it’s well over 20 years old. A lot of things have changed but the principles of business haven’t.
The book is spilt into three main sections:
– leadership
– reducing costs
– increasing revenues.
Within those sections are the 78 ways or steps. The first of which is deciding who should read this book. Some of these directly contradict what you might think is good management.
This book doesn’t pull its punches. The advice hits home hard as you realise you haven’t been that focused on profit in the past. The steps are short and vary in difficulty and opportunity. Some also require you to be much braver and more determined than others.
On two points the book is wrong. That’s step 37 on Accounts Payable and step 38 on Deplete Inventory. The American phrases mean refer to delaying payments to suppliers and reducing stocks of raw material, work in progress and finished goods.
He says “If you extend your payables thirty days and reduce your inventory fifteen days, then you’ve just reduced this year’s costs for goods and services by 12% (30+15)/365 = 12%”. H even goes on to say “If your accounting system doesn’t report cost and profit that way, then ignore it, because your accounting system is wrong.”
This is complete nonsense. It confuses the concept of revenue and profit with cash flow and that’s dangerous, especially in a growing or shrinking business where profit and cash flow can be trending in different directions. Costs are matched against their associated revenue so items bought to be resold, are charged when the item is sold. Period costs (rent, utilities) are matched against the time period, sometimes in advance of payment and some times in arrears. Finally it’s logically inconsistent because a cost for stock can’t be matched against the profit when it’s 1) delivered and goes into stock and 2) when the supplier is paid because that would double count the costs.
This has cost the book one star because, if you’re business is struggling at all financially, you must understand the interrelationships between your Profit & Loss Account, Balance Sheet and Cash Flow. Otherwise you risk making some very bad decisions. Fortunately it doesn’t stray too often into accounting issues but it would have been a better book if it had explained a simple model of how profit is generated in a business.
The best finance books I’ve read for people who are not accountants are Genghis Khan Guide to Business and Financial Foreplay. There’s a tendency for the books to be dull but both these are vibrant with possibilities although very different in nature.
It is available to buy from Amazon.co.uk and Amazon.com.
[bestbooks]
Get To Know Me
[sos]
[6Steps]
