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It feels good to celebrate a bumper year, when the number at the bottom of your annual accounts is higher than last year. But is profit enough and what does it really mean?

Does it show how your business is progressing – or is it just an arithmetic exercise?

Maximising short-term profits is rarely an effective business objective. Instead, an owner is more likely to meet their personal goals and aspirations by setting a medium or longer-term strategy.

This may mean, of course, that profit is not maximised in the short-term. Profits are affected by short-term measures such as cash maximisation, which can result in a period of price cutting to reduce stock levels; or profits may be restricted due to investment in additional plant, or the recruitment and development of people.

Numbers’ true meaning

There are many reasons why profits fluctuate. The important thing is to be aware of why your profits are in motion and what the long-term effect is.

After all, the numbers simply measure progress towards the achievement of your strategic objectives, and are rarely important on their own.

Accountants wouldn’t normally say that numbers are unimportant; but then we at Haines Watts are not normal accountants. We’re more interested in working with our clients to help them understand their businesses and achieve their goals. Sometimes that means more than just numbers.

Find and contact your local Haines Watts office

About the author

Andy Minifie

Andy’s an experienced business leader working within Haines Watts. His strategic development of the firm whilst in the role of Group Managing Partner, has seen the business grow from a £20m turnover accounting firm to a multi-disciplinary operation of business advisors with an £80m turnover. It’s this expertise, coupled with strong leadership and collaboration with other like-minded individuals that now sees the brand as the top 13th largest firm of its type in the UK.

Having originally qualified as an accountant with a large multi-national firm, Andy worked in the UK as well as in Hong Kong, China, and other parts of the Far East with a broad range of clients. It was during this period that he developed his desire to work with owner managed businesses, who needed forward thinking proactive advice rather than just the production of historic accounts. On returning to the UK some 30 years ago, Andy joined Haines Watts as a Manager in the Birmingham office. Having opened a further office in the Midlands, he became involved in establishing several other Haines Watts sites across the country. He then joined the National Board in 1998 and became National Managing Partner in 2004, a role he held for 16 years until recently, when he decided to take the title of Chairman and return to working in the field with teams of like-minded individuals, pushing the business forward.

Andy remains dedicated to leading the business from the front and is happiest when sharing his experience with younger, enthusiastic team members.

Whilst working with groups of offices in Scotland, Yorkshire, Humber and the West Midlands, Andy spends much of his time in the East Midlands. His personal value statement of “together we achieve more”, works both in his business and his personal life.

“Despite my Yorkshire upbringing, I live in the West Midlands with my wife Kathryn, and on the rare occasions when I’m not working, I’m an avid scuba diver.”

One response to “Profit is not always progress”

  1. Louise Elizabeth Pepperall

    Very True.

    Reply

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