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Proven Strategies to Increase Profit

Running a business can feel like riding a roller coaster. Some years, profit comes easily. Other years, unexpected events such as economic downturns or supply chain disruptions can send your results into the red.

If you’re unsure whether the sum of your financial decisions will lead to profit or loss at year-end, it may feel unsettling. The good news is that there are concrete steps you can take to stabilize results and grow consistently. Here are proven strategies to increase profit in your business.

Understand Your Numbers

Profitability is not just about whether you made money; it’s about how efficiently you did it. That’s why you should look beyond total profit, which is the dollar value, and focus on profit margins, which are ratios in your income statement (P&L). Three measures are especially useful:

  • Gross Margin – Revenue minus the direct cost of producing your product or service. This shows how much money you keep after covering production costs.
  • Operating Profit Margin – Operating income divided by revenue. This accounts for overhead such as salaries, rent, and marketing, giving you a clearer view of core business performance.
  • Net Profit Margin – Net income divided by revenue. This is the “bottom line” after all expenses, interest, and taxes.

Tracking these margins over time helps you answer important questions:

  • Are rising costs eating into profits?
  • Is overhead in line with revenue growth?
  • Is the business generating enough return for the risk you are taking?

Regular financial reviews, supported by charts, analysis, and clear explanations, make it easier to spot trends, identify risks early, and take action before problems grow.

Revisit Your Pricing

Your pricing strategy directly affects profitability. If prices are too high, you may lose sales. If they are too low, you are leaving money on the table.

Ask yourself:

  • Did I base pricing on gut feel or solid market research?
  • Have I factored in all direct and indirect costs?
  • Am I achieving an appropriate margin on every sale?

Even small adjustments in pricing can have an outsized effect on your bottom line.

Analyze Product and Service Profitability

Not all revenue contributes equally to your bottom line. Some products or services generate strong margins, while others quietly drain it. Without analysis, it is easy to assume popular offerings are profitable when they may actually be undermining profitability.

Start by reviewing gross margin for each offering and comparing it to the time and resources required to deliver. This often reveals that certain low-volume items are highly profitable, while high-volume ones barely break even.

This insight allows you to refine your mix by adjusting prices or discounts, discontinuing unprofitable items, and doubling down on offerings that truly drive profit.

Manage Expenses Wisely

Strong profit depends not just on revenue, but also on how effectively you manage expenses. Begin by separating non-discretionary expenses such as rent, insurance, and production costs)from discretionary expenses like dues and subscriptions, conferences, and entertainment.

Look for ways to manage both categories more effectively. This could mean renegotiating supplier contracts, automating manual tasks to reduce labor costs, analyzing marketing ROI, or setting clearer guidelines for employee spending.

Thoughtful reductions add up over time and, more importantly, free cash for reinvestment in growth.

Refinance High-Interest Rate Debt

Financing can be essential for growth, but debt at high interest rates can quickly erode profits. If interest expense is eroding profitability, explore refinancing options.

Businesses with consistent profitability are in a stronger position to secure lower-cost financing, which in turn creates more room for reinvestment. If you want to understand how broader economic shifts impact your financing costs, our post on how interest rate changes affect your business explains what rising or falling rates mean for borrowing and long-term profitability.

The Bottom Line

Profit is the foundation of long-term business success, and improving it requires focus on the areas that matter most. When you understand your numbers, refine your pricing, prioritize profitable offerings, manage expenses effectively, and reduce costly debt, you create the conditions for sustainable growth. Stronger profit margins give you flexibility, resilience, and the confidence to make decisions that move your business forward.

Momentum CFO helps business leaders turn financial information into strategies that drive results. If you are ready to strengthen your bottom line, schedule a free consultation today and let’s work together to grow your business profitably.

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Preparing Your Business for Sale: Why You Need a Fractional CFO

Why Exit Planning Is Critical for Business Owners

Exiting a business is more than a transaction. It’s the culmination of years of effort and investment. Whether you’re considering a merger, acquisition, ESOP, or family transfer, preparing your business for sale is one of the most important financial steps you’ll ever take.

The strength of your financial planning directly influences how smooth and profitable your exit will be. Buyers and investors want confidence that your company’s financials are reliable and that the business is positioned for growth.

This is where a fractional CFO makes all the difference. Fractional CFO exit planning provides the expertise buyers expect, helping you strengthen financials, boost valuation, and prepare for a successful transition.

How a Fractional CFO Helps You Prepare to Sell

A fractional CFO brings the financial expertise required to maximize your business’s value and position you for the strongest possible deal:

  • M&A transaction expertise – navigating valuations, due diligence, and deal structures.
  • Strategic planning – aligning your exit with both business goals and personal wealth objectives.
  • Financial modeling – projecting future performance under multiple scenarios.
  • Business valuation support – helping determine a realistic, defensible value for your company before negotiations begin.
  • Leadership experience – implementing processes and controls that give buyers confidence in your numbers.

With a fractional CFO at the table, you’re not just preparing financials—you’re preparing a compelling story of growth, stability, and opportunity that appeals to buyers.

Increasing Business Value Before a Sale

When you prepare your business for sale, the first impression buyers get is from your financials. Inaccurate or incomplete records lower valuation and can even derail a deal.

A fractional CFO increases business value by:

  • Producing clean, reconciled statements buyers can trust
  • Normalizing earnings to reflect true profitability
  • Building reliable cash flow models to demonstrate future growth
  • Presenting a balance sheet that highlights financial strength
  • Implementing controls that reduce buyer risk

These steps not only prevent red flags but actively improve valuation, allowing you to negotiate from strength.

Ask yourself: Would a buyer be impressed by your financials today? If the answer isn’t a confident yes, a fractional CFO can help you get there.

Strengthening Financials to Maximize Valuation

Beyond accuracy, buyers want to see a business with disciplined financial management. A fractional CFO helps you:

  • Separate personal from business expenses so profitability is clear
  • Improve working capital by managing receivables, payables, and inventory
  • Document financial processes to show operational stability
  • Create forward-looking forecasts that highlight growth potential

This is where fractional CFO exit planning truly shines—turning financial discipline into higher valuation multiples.

When to Start Planning Your Business Exit

Exit planning takes longer than most owners expect. Ideally, you should begin three to five years before your target sale date. That window gives you time to strengthen operations, optimize taxes, and build a transition strategy.

Key considerations include:

  • Timing and tax strategy – early planning helps minimize taxes and maximize proceeds.
  • Retirement goals – if your exit coincides with retirement, plan for both financial and lifestyle changes.
  • Employee retention – incentivize key team members with deferred compensation or retention bonuses so they stay through the transition.

The earlier you prepare your business for sale, the more options you’ll have at the table.

Building the Right Team for a Successful Sale

A successful exit requires a strong team of advisors. Surround yourself with experts who can manage the complexities of the process:

  • Fractional CFO – to lead financial readiness, prepare valuation models, and guide strategy
  • CPA – to ensure GAAP-compliant financials and optimize tax reporting
  • Legal counsel – to structure deals, draft contracts, and handle negotiations
  • Tax and estate planners – to preserve wealth and minimize after-tax impact
  • Benefits brokers or HR consultants – to manage employee benefits and transition plans

The Bottom Line

When you prepare your business for sale, you want to maximize value and minimize surprises. A fractional CFO ensures your financials are strong, your valuation is defensible, and your business is presented in the best possible light.

By starting early and surrounding yourself with the right advisors, you’ll not only increase your company’s value but also achieve a smoother, more profitable transition.

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5 Financial Tips for Reopening a Small Business

You may be wondering, “is it safe and financially feasible for reopening a small business?” Well, after an extended period of closures to reduce the spread of the coronavirus (COVID-19), businesses that survived the economic downturn are starting to reopen.  

In this article, we’ll review financial tips to help you with reopening a small business and stay open during these uncertain times.

1 | Avoid liability by complying with health and safety regulations

There are daily changes to city, county, and state requirements to help curb the spread of COVID-19. Live in California?  Here’s the latest from Governor Newsom.  

If your business has been closed for an extended period, you’re probably already running low on cash. Therefore, the last thing you need is to face costly fines or lawsuits for non-compliance.  In addition, non-compliance could put the lives of your employees and customers at risk. 

Research what is required to for reopening a small business such as yours.  Stay informed of the latest changes.

Do your employees need to wear masks?  Are you required to post signs about coronavirus?  Must you implement touch-free payment systems?  Change your business practices as required to keep yourself, your employees, and your customers safe and avoid unnecessary expenses. 

2 | Don’t lose sight of deferred expenses for your small business

Have you deferred payments to vendors and lenders?  Don’t lose sight of the fact that you may owe a large sum of money in the future.  Deferring payment allows you to more time to pay your bills. However, it doesn’t eliminate your obligation to pay them.  

Make a list of all the expenses you’ve deferred and include them in your cash forecast.  Don’t be caught by surprise by large lump-sum payments.  

Furthermore, are you worried that you won’t be able to pay your expenses by the deferred due date? If so, contact vendors and lenders now to make alternative payment arrangements.  As a small business during this COVID-19 crisis, they may be willing to make further accommodations. They would much rather see you reopen your small business and make a late payment. It’s much better than no payment at all. 

3 | Understand the Payment Protection Program loan forgiveness requirements

Did you receive a Payment Protection Program (PPP) loan to help you maintain pre-pandemic staffing levels? If so read our latest blog on new requirements for PPP loan forgiveness now to get the steps needed to have your loan forgiven.

Here’s the quick scoop: PPP loans are fully forgivable (you don’t have to repay) if you use the funds for approved purposes.  At least 60% of PPP funds must be spent on payroll-related costs within 24 weeks of receiving the loan, and no more than 40% of the funds may be used for rent, mortgage interest, and utilities.  

First, read our PPP loan forgiveness post first.  Second, contact your lender. You’ll be asked to provide evidence of how you used the funds. Therefore, make sure you are tracking your expenses accordingly.  Not using a payroll system or running your small business without a CFO?  Drop us a line and let’s get you set up for success.

4 | Update your cash projections before reopening a small business

Your account balances may be sufficient now. However, when reopening a small business, your expenses will begin to go up again. What will your accounts look like in six weeks?  

If you are uncertain of how to predict this, create a cash forecast that lists all weekly inflows and outflows of cash.  Still not sure how to proceed?  Send us a message and we can provide consultation as if we were your personal CFO!

A cash projection provides crucial information about when you may experience a shortfall.  Knowing when cash will run low helps you act now to change your future financial circumstances.   


5 | Start prepping your small business to weather the storm

COVID-19 is not going away anytime soon. Furthermore, the coronavirus has put a spotlight on the financial weaknesses of small businesses.  Almost all of us have seen one or more of our clients press pause. Or, worse yet, our favorite small businesses close completely during the pandemic. Some yet to reopen. 

Why? Due to local and state regulations. In addition, because there wasn’t enough cash to continue operating.  

Therefore, here are a few key steps you can take now before reopening your small business. Ensure you are better prepared for reopening post-COVID-19, and for future financial emergencies.

Financial Steps to Reopening a Small Business:

  • Build a cash cushion equal to three or more months of expenses.  Treat savings as a monthly expense that you must “pay” to a separate savings account.
  • Apply for a line of credit to draw from during emergencies.
  • Consider alternate ways of generating revenue, including digital sales.
  • Cut non-essential expenses. 
  • Identify alternate vendors to supply goods and services if your primary vendors can’t deliver.
  • Develop business continuity and disaster recovery plans.  Need help developing a specific financial plan for your small business?  Contact us at 858.284.0314 or schedule your free financial consultation. 

Final Thoughts on Reopening A Small Business

This is a stressful time for most small business owners. We are all navigating uncharted waters. Therefore, don’t hesitate to ask for financial help.

With thoughtful planning and careful financial management, you can rest easier knowing that you are better prepared to weather the current COVID-19 economic crisis.