by MHolland | Jun 6, 2025 | Business Tips, Cash Flow, Systems
Lately I have been truing my client’s thinking to focus on one Key Performance Indicator as the grandaddy of them all…
True, it is not a leading indicator, it is a results driven indicator. Once we calculate it, it is too late to change. It is done.
It is an indicator that I see as the great equalizer. It can apply to all businesses and used to compare results across varied industries.
The one KPI that rules them all is…. (drum roll, please) …
Net Profit Before Tax (NPBT)
Not revenue. Not gross margin. Not EBITDA.
Net Profit Before Tax is the ultimate scorecard for your business.
Why NPBT is King
Net Profit Before Tax is brutally honest.
It shows what is really left after you have paid everyone else — your staff, your suppliers, your landlord, your bank, and even yourself.
In the calculation I include interest, amortization, and owner’s market-based salary (even if only accrued as a reversing journal entry).
In other words, it includes all expenses up to taxes. Taxes is a distribution of profits, so we exclude that.
To be clear –
We’re talking net profit after paying the owner a fair market salary, covering interest, and recording amortization. It is your true business performance before the taxman takes his cut.
The New Reality – 5% is Break-Even
Today, 5% net profit before tax is the new break-even.
Why?
Because if you are only producing a 5% return, any bump in the road that is beyond your control (tariffs as an example) means you have no leverage to react.
It is doubtful, if you have been doing only 5% NPBT that you have much, if any, savings to meet a crisis, correct?
For the owner, as a person separate from working in the business, 5% is not enough to mitigate the financial risk of being in business.
10% = Solid. Sustainable. Smart.
At 10%, you have a bona fide business.
You have enough margin to:
- Invest in your team.
- Ride out a rough quarter.
- Sleep well at night.
Now you are not just surviving — you are building.
15% = Elite Territory
When you consistently achieve 15% net profit before tax, you have enough left over to:
- Pay your taxes when due.
- Save money.
- Pay down debt.
- Pay dividends to the shareholders.
15% NPBT is a benchmark of an extraordinary business. You have a business that has many things right:
- Correct, value-based pricing.
- Lean operations
- Strong leadership
- Loyal customers who value what you do
Why This KPI Works for All Businesses
Whether you are selling software, growing flowers, managing buildings, or doing construction work — NPBT works as a comparative KPI across every business.
It cuts through all the differences in industries, and gives you a simple question to answer:
“How much profit does this business really make after everyone gets paid?”
In Conclusion
Track your Net Profit Before Tax. Make sure to deduct interest expense, amortization, and a market-based wage for the owner.
To determine the market-based wage, calculate what it would realistically cost to replace yourself.
Hit 10%, and you are doing well.
Push to 15%, and you are building a business with swagger.
If you are sitting below 5% — it is time for a serious tune-up.
Look at your pricing first, then margins, fixed costs, and whether you are providing awesome service!
By the way, I am indebted to the Greg Crabtree a brilliant CPA who wrote the book, “Simple Numbers, Straight Talk, Big Profits!” for many ofg the ideas shared above.
Thanks for reading…
by MHolland | May 9, 2025 | Business Tips, Cash Flow, Systems
If you want a thriving business, it is not just about hard work, talented people, or even brilliant ideas. It is about systems.
Systems are the hidden engines driving your business forward (or holding it back). Here is why they matter — and how they can supercharge your performance.
Your business are the systems; the systems are your business. No systems equal semi-organized chaos.
Systems Eliminate Chaos
Without systems, every task becomes an ad hoc scramble.
- Who is doing what?
- When is it due?
- What is the process?
A solid system gives your team clarity, reduces firefighting, and makes work smoother. Less drama, more results.
Systems Make You Scalable
You cannot grow on hustle alone.
Growth needs repeatable, reliable processes — ones that do not break when you add new customers, hire new staff, or open a new location.
Think:
✅ A sales process that works without you in the room
✅ An onboarding process that does not depend on memory
✅ A reporting system that shows performance at a glance
Systems Improve Accountability
With clear systems, everyone knows the rules.
It is easy to measure performance, spot bottlenecks, and fix issues before they explode. No more finger-pointing.
Good systems shine a light on:
- Where time or money is leaking
- Which tasks are stuck?
- Who needs help to hit targets?
Systems Unlock Profitability
Disorganized businesses bleed cash — through wasted time, errors, missed opportunities, and inefficiency.
Tight systems mean:
💰 Lower costs
💰 Faster turnaround
💰 Happier customers.
Bottom line? More profit.
Systems Free Up the Owner
Here is the big one: without systems, you are a bottleneck.
Every decision, every approval, every fix runs through you.
With systems, you can step back and lead, not micromanage.
Final Takeaway
Businesses do not rise or fall just on effort — they rise or fall on systems.
Want to improve performance?
Start by improving your systems.
Thanks for reading…
by MHolland | Apr 11, 2025 | Cash Flow, Cloud-based Accounting
Let us clear something up – your bookkeeper is essential. It is our main core deliverable at ControllershipPLUS.
Your bookkeeper brings order out of chaos.
He/she keeps your records tidy, your bills paid, and your payroll humming. But if you are relying on them to help you make high-level financial decisions — you might be asking the wrong person to do the wrong job.
And it could be costing you more than you realize.
Bookkeeping vs. Controllership – What is the Difference?
Bookkeepers handle the what happened:
- Entering transactions
- Reconciling accounts
- Paying bills and managing payroll
- Keeping things organized for the accountant.
Controllers focus on what it means:
- Analyzing trends and margins
- Flagging cash flow risks before they hit.
- Forecasting, budgeting, and scenario planning
- Helping you understand your numbers — not just record them.
Why It Matters to Your Bottom Line
A great bookkeeper keeps the financial engine running smoothly. A controller helps you steer the car. Without that strategic layer, you could be:
- Missing red flags hiding in your expenses
- Over- or under-pricing your services without realizing.
- Flying blind on profitability by department, job, or location
- Getting surprised by tax bills, cash crunches, or margin drops
Real Talk: Most Owners Do Not Need More Data — They Need More Insight
Let us be honest. You probably already have piles of reports. But are they helping you make better decisions? Or just collecting dust in your inbox?
A controller filters the noise. They connect the dots between your numbers and your goals — and help you course-correct before small issues become expensive problems.
What It Looks Like to Have a Controller on Your Side
Imagine:
- Knowing your monthly breakeven point without hunting through spreadsheets
- Having someone flag when margins start to slip — before it is a crisis.
- Being able to plan new hires, equipment, or expansion with real financial clarity
- Getting financial commentary in plain English, not accounting jargon
This is not fluff. It is smart business. And it is what separates stable companies from those constantly putting out fires.
Final Word
Your bookkeeper keeps the score. Your controller helps you win the game.
If you have been operating with only the basics, it might be time to upgrade your financial strategy. You do not need a full-time CFO — but you do need more than data entry.
We help businesses bridge that gap — without adding internal overhead.
Thanks for reading….
by MHolland | Mar 28, 2025 | Business Tips, Cash Flow, Systems
The following is a reprint of a Four-Part series of Blogs I wrote in 2028.
In the previous 3 Blogs I wrote about the first 3 ways to grow a business, any business.
Way number 1 is to increase the number of customers/clients (of the type you want)
Way number 2 is to increase the transaction frequency (or in business terms, the number of times they buy)
Way number 3 is to increase the average value of each sale.
And, way number 4 is to increase the efficiency of how you do the first 3.
The measurements of the first 3 ways to grow your business are a breakdown of what is in your total sales figure:
Number of active customers
X
Number of times they shop/buy
X
The average sale per transaction
=
Total revenue
All 3 of the above can be measured and when you increase each one as an independent strategy you can achieve some explosive growth!
So, you may be wondering….
How Do You Measure Increasing the Efficiency of Your Systems?
The measurement for the efficiency of your systems is the cost per transaction.
For your variable costs it is your gross profit margin.
For your fixed expenses it is the total fixed costs divided by the number of transactions.
And, this is where it can get very slippery!
Because we all know that Profit is equal to Revenue less Expenses, then it would seem that the way to increase profit is to reduce expenses!
And this is a huge mistake, if applied without further thinking …
Even Huge Companies Really Get This Wrong
I read the other day that stock repurchases (something that was illegal under SEC rules in the past) are all the fashion in the public company world.
In other words, large companies increase stock value by using internally generated cash to buy their own stock back.
This increases the share value, and then the Executive stock options are worth more, which they cash in on.
Do you see a motivation here?
All this is done at the expense of the people who are generating the bulk of the share value – the people who work there.
So, am I saying that a business should not reduce its costs?
No, I am not. What I am saying is that a company must use a different way of thinking when they examine each cost of the business…
Before Axing a Cost, You Must Ask These 3 Questions
As I mentioned above, because revenue – expenses = net profit, it would seem logical to think that reducing expenses will increase net profit.
And, this would (in most cases) be totally wrong.
Why?
Because costs drive value.
I will repeat that – costs drive value.
And if you reduce them willy nilly, you will end up cutting the heart out of the business, and revenues will eventually, sometimes quickly, decline with the cost-cutting.
There are 3 Vital Questions to Ask Before Eliminating or Reducing any Expense
They are:
- Does this expense help to increase sales?
- Does this expense help to increase Return on Investment?
- Does this expense help to increase cash flow?
If the answer is “no” to any of those questions, then either cut it, or replace it with a lower cost alternative.
Let’s look at some simple examples. Take rent – perhaps you are in a high-traffic location for a retail store and you are paying $500 a square foot. You find another location for $250/ square foot.
If the high-traffic location can generate more than twice the sales per square foot, then it is a better investment than the lower cost alternative.
Coming back to my example of the share re-purchase schemes by public companies. Imagine that they – instead of buying back their own shares – invested in better infra-structure, team training, and higher wages. Perhaps those drivers of value can result in higher sales and thus higher net profit.
From the higher profit, dividends could be paid to the shareholders, and everyone wins.
The Best Way to Create Effectiveness and Efficiency is Systems
As Michael Gerber said in his underground bestseller, The E-Myth, the systems are your business.
Put another way, without good systems, there is just you, “doing it, doing it, doing it”. You may be good at the technical work of the business, but that is not what is required to create a sustainable business. For that you need systems!
Your systems must revolve around what your customers truly value so that you can deliver a consistently awesome product or service in a manner that has people feel cared for and appreciated.
Start by flow-charting every vital customer-centric function of your business, and eliminate steps that add no value, and add steps that do.
One way to find out what your customers value is to run a Client Advisory Board, where you meet (or rather someone else meets with them rather than you as owner, so they will be more honest) with a select group of your best customers and ask them what is working and what is not working in your business.
It takes guts to do that, yet most good(A) customers will not trash your service offerings – they will offer constructive feedback that will help you run a better(and hence more profitable) business in service to them.
Thanks for reading….
by MHolland | Mar 14, 2025 | Business Tips, Cash Flow, Selling Tips
In the last few weeks, I have written two blogs that were repeats from a few years ago…
These blogs are focused on the first three ways of the 4 Ways to Grow Your Business (any business).
The following is the third part in the series. Enjoy!
What is the 3rd Way to Grow Your Business?
Over the last 2 weeks I wrote about the first two ways to grow your business. Today I am going to write about the 3rd Way to Grow Your Business.
As a refresher – the 1st Way is to increase the number of customers of the type you want. Here the big takeaway is to find out who is serving clients in your industry and create a relationship with those businesses, so you can get direct “warmed-up” access to their clients. This transforms a cold marketplace to a warm one. For the full Blog post, please click here:
Leverage Your Business – There Are Only 4 Ways to Grow, As You Know
The 2nd Way, which I wrote about last week is to increase the number of times (on average) your customers do business with you. For the full Blog post, please click here:
The Best Way to Leverage the Growth in Your Business – Part 2
The 3rd Way to Grow Your Business is this – to increase the amount people spend with you during each interaction (in accounting terms – increasing the transactional value of each sale).
The strategy and the resulting actions you will take are completely different from the first two ways to grow when you focus in on this way.
And, by combining all three together you will have the potential to create massive increases to your Net Profit.
Find the Key Number
First, to increase something, you need to know what your starting point is. For this Key Performance Measurement, it is quite simple and easy to find.
You just take your total sales for the period (month, quarter, year) and divide that by the total number of sales invoices issued to get your average dollar amount per transaction.
Ok, now that you have a starting point…
How do You Increase Your Average Sale Without Sounding Salesy?
One way is creating scripts to use to simply ask your customers if they want to add to their purchase.
Of course, we all know the ubiquitous line from McDonald’s clerks, “would you like fries with that burger?”
And what they know at McDonald’s is that this has a profound impact on the average sale per customer and the net profit.
Another way to view “scripting” is to take the opportunity to educate your customers/clients on all the services/products you offer. Your customers may just not know you offer certain things and will often be delighted to spend more with you because you are adding value to their lives!
In fact, it is the focus on adding value, on educating your customers with a solution-minded intention that moves you from simply sounding “salesy” and mechanical to interested, and educational.
Newsletters are a fantastic way to educate your customers and not only increase your average sale, but to increase your transaction frequency.
Discounting is Bad, But It is Ok When You Do This First
Another way to increase your average sale is to bundle things into packages or offer 3 for 2 specials.
For instance, if someone is interested in cross-country skiing and they have not skied before, they do not come in to just buy skis. They also need, boots, poles, gloves, a parka, a toque…you get the idea. Even lessons.
All these items can be packaged into a beginner cross-country ski package and a discounted price offered for the bundle.
We do not recommend our clients offer blanket discounting across all their product lines as a way to grow sales, however, when bundling, it is ok to offer a reduced price for the whole package.
The reason is that the increased amount they are spending justifies the discount.
Add Value and Raise Prices
Finally, it may be time for a price increase. First you must examine your products/services and ensure that the value you are offering is high and service levels are high in terms of quality, timeliness, and so on.
Most business owners under-value their products/services – looking at them through the lens of their competitors rather than their customers.
Many business owners are fearful of raising prices, yet when they do, they often are surprised to discover that almost no customers leave, and the few that might were often price-shoppers and difficult to deal with anyway.
Case Study in Action
A few years ago, we met with a client to do some strategic planning.
The client was a log home builder, and they built exceptionally beautiful homes.
We went through the 4 Ways to Grow and saw quickly that the only leveraged way to grow was the 3rd Way – increase the average sale of each transaction.
(After all, how many log homes per year would most people likely buy? So, transaction frequency could not easily be increased).
The power of this focused, strategic way of the thinking is that we could rule out the second way and concentrate a lot of our attention on the 3rd Way.
I knew that the owner had outsourced the marketing and sales to another company. I also knew – from observation – that the marketing people were doing very well financially by the amount of time spent golfing, the cars they drove and the commissions in the business being paid out.
This client was giving up a lot of profit.
So, I asked the owner – “why don’t you get your wife to do the marketing? After all she is incredibly good at building websites and could put together a nice presentation.”
His initial answer was, “no way!”
I asked, “why not?” (Good business coaching is asking rocket science questions like this!)
He told us that the marketing guys had an extensive network throughout the USA and that if he moved away from them, he could never, ever replace those valuable contacts they had developed over years and years.
I kept probing and pushing a bit, and he decided to go for it and get his wife involved in the marketing and do it all in-house.
The results were explosive!
The very next year his sales doubled, and his net profit margin hit 50%!! This was an unheard-of net profit in the log home building business.
He sold homes to very wealthy people, including the 4 chalets at the Salt Lake City Olympics.
This volume continued over the next few years, so he became quite well off.
Thank you so much for reading…
by MHolland | Mar 7, 2025 | Business Tips, Cash Flow, Selling Tips
So, the U.S. just hit Canada with a fresh round of tariffs. Great. But instead of panicking, let us talk about opportunities—because there are ways to not just survive but thrive in this new reality.
Remember, the tariffs did not just affect you alone if you sell into the USA. It affects everyone else in your industry. By getting creative, taking massive action (in the right direction), you can grow your business inside this demanding situation.
Many businessowners will react with fear. Fear often leads to inaction. This is where you can take the lead and get proactive.
Oh, and remember this – the Canadian dollar is weak right now. This is bad news for vacations but fantastic for selling into the U.S. market. If you play your cards right, you could come out ahead. Here is how.
Turn the Weak Loonie into a Power Move
With the Canadian dollar low, your products just got cheaper for U.S. buyers. Even with tariffs, you might still be the best deal in town. Make sure your U.S. customers understand this advantage—lock in contracts while your pricing looks attractive.
Sell Beyond the U.S. (Yes, it is Possible!)
The U.S. is Canada’s biggest trade partner, but it is not the only game in town. Trade deals like CETA (Europe) and CPTPP (Asia-Pacific) give you tariff-free access to other markets. Time to explore who else wants what you are selling.
Get Smart About Supply Chains
If tariffs are making it painful to import materials from the U.S., look at domestic suppliers or other international partners. Some Canadian companies are already shifting supply chains to Europe and Asia to dodge extra costs.
Lock in Pricing Before It Gets Worse
If you are exporting to the U.S., now is a great time to negotiate longer-term contracts with customers. Tariffs can change, but locking in deals while the currency works in your favor can help hedge against future cost spikes.
Play the Government Support Card
There is a good chance the Canadian government will roll out tariff relief programs, tax breaks, or incentives to keep businesses competitive. Stay plugged into industry associations and government resources—you might be leaving money on the table otherwise.
Pass Tariff Costs Smartly
If you have to raise prices, do not just slap a tariff surcharge on your invoices. Look for ways to add value so customers do not just see an extra charge but a better overall offering. It is bundling services, improving delivery times, or locking in loyalty rewards.
Cut Costs, the Smart Way
Instead of slashing staff or quality, look at efficiency plays. Are there manual processes eating up time that you could automate? Could bulk ordering save costs? Small tweaks can protect your bottom line without killing morale or product quality.
Work the Trade Rules
Some tariffs have exemptions or workarounds. Depending on what you are selling, you might qualify for duty drawbacks, trade programs, or reclassifications that reduce the impact. A good trade lawyer or consultant can help you find loopholes you did not even know existed.
Bottom Line – Tariffs Are not the End of the World
Sure, tariffs make things harder. But with the right strategy, they do not have to crush your business. Play the weak Canadian dollar to your advantage, explore new markets, optimize costs, and keep an eye on government support.
Lastly, awesome service is, now, more than ever, a competitive advantage. Any business in a tough economy is going to suffer when they do not have awesome service.
Remember this, it is not just the quality of the product or service you sell – it is the process of delivering it that defines awesome service.
You do not, unfortunately, get to define awesome service – your customers do.
And one last-last thing! This is not Canada’s first tariff rodeo—we have survived before, and we will do it again. The smart businesses? They will come out stronger than ever.
Thanks for reading…
