The hardest part of running a business isn’t working hard—it’s knowing which levers to pull to move forward. We talk to owners every day who are unsure how to make their next financial move: profitable companies still feeling cash-strapped or struggling businesses unsure what to fix first.
When you’re in the heart of your business day to day, the road forward can be hard to identify, let alone follow. Everyone’s challenges feel unique. But the truth is, every company’s path runs through the same five areas: financial statements, cash, profitability, forecasting, and sales outlook. Focus there, and you can make the small shifts that lead to lasting growth instead of costly surprises.
That’s the heart of Profit-Focused Accounting, the basis of our Virtual CFO service for over two decades.
Profit-Focused Accounting helps business owners connect their numbers to the real-world activities that create those numbers. Instead of only looking backward at financial results, it looks forward — breaking revenue down into non-financial drivers that can be tracked and improved.
For example, a law firm might track the number of new cases opened, average fee per case, or the timing of settlements to understand what’s really fueling revenue. A creative agency might look at active client retainers, billable utilization, or average bill rate. Those are important inputs to a forecast that shows what’s coming next — giving you a clearer picture of future cash flow and profitability.
In short, Profit-Focused Accounting turns your financials from a scorecard into a steering wheel.
Why Did We Create the Profit-Focused Maturity Model?
Whether a business is profitable and trying to scale, or struggling and trying to stabilize, we find that an owner’s first instinct is often to pour their attention on whatever area is causing most trouble at that moment. A reactive approach.
Instead, when we looked at our most successful clients, we learned that the “secret” to success is to work deliberately on several key areas.
The Profit-Focused Maturity Model provides a standardized but flexible system to help clients move through the profit-focused journey in a way that focuses their attention on the areas that matter most to them, in the most logical order for their goals.
It’s a way to eat the elephant, one bite at a time, by knowing which bites to take when.
How Does the Profit-Focused Maturity Model Work?
It starts with a measurement system that allows owners to gauge their maturity in five key areas.
The goal for businesses isn’t to get all 5s, but to figure out, with your CFO, which areas are holding back your growth today, so you know where to focus your efforts.
The Five Areas of Profit-Focused Accounting:
Financial Statements, Cash, Profitability, Forecasting and Sales Outlook
Here are the five main areas and how they build on one another to impact your business.
Financial Statements: The Foundation of Profit-Focused Accounting
The underlying foundation of Profit-Focused Accounting has always been financial reporting. At the end of the day, it’s garbage in, garbage out.
There’s no forecasting without reliable information. These aren’t just details. Imagine deciding to buy a building, only to find months of overstated revenue when you clean your books.
In onboarding, it’s the first thing we tackle. Until you get out of “ad hoc” and into a “foundational” or “standardized” level of maturity, forecasts will be meaningless.
Cash: The Fuel for Your Journey
Everyone wants to know if they have enough cash. Early on in their maturity, few businesses do. Our guidance is to have 10-30% of your trailing 12-month revenue in cash (on the low end, roughly two payrolls). The riskier the business, the higher the reserve. Most businesses will be in the 10-15% range, though.
Meeting your cash goal is the foundation of financial maturity – but it’s often the slowest area to improve. Why? Because it takes discipline and, oftentimes, change in the company culture. Some companies overspend on nice-to-haves. Others pull out all the cash to fund their lifestyle.
A skimpy bank balance has consequences, whether it’s a sleepless night, a line of credit to make payroll or a lower EBITDA multiple when it comes time to sell. You don’t want so much cash that it puts you at risk, but you need enough of a cushion, so you don’t threaten operations or lose opportunities.
Profitability: Where You Stack Up (and Where You Hope To)
Profitability is business speak for keeping your eye on the ball. It’s a way to make sure that every quarter you see the results of your effort. When you understand your income statement, you can benchmark your profitability with industry standards and, if there’s an area where you’re falling short, figure out how to improve by understanding your revenue drivers.
Profitability gives you a target to aim at – a target based on industry standards and your own financial goals for an exit, however far off in the future that may be. Once you have that target, it provides the parameters in which to balance the work of trimming expenses and increasing revenue.
Forecasting: A Road Map for (and Reality Check On) Growth Goals
We often talk to owners who have growth goals. “I want to grow by 10%” or “I want to have this top line number.”
As businesses progress in their maturity, they gain a better understanding of the revenue drivers that enable growth. Knowing the revenue drivers means asking, “OK, what would it take? If you’re here today, what’s going to be different? Let’s break it down into, is this a sales problem? Is this a product problem? Is this a service delivery problem?” In other words, what are the non-financial drivers of your business?
Once you dig in, you can see, “Oh we need forty more of those,” to reach that goal. But then the production team raises their hand and says, “We can’t do 40 more of those. We don’t have the machines or the people.” Then we can see, “Ok we need some capital expenses or new hires.” That’s going to change the forecast.
A forecast provides a roadmap to reach those top-level goals. That can be a wake-up call, because it forces you to start focusing on what it’s going to take to get there.
We often talk to owners who are struggling. They know they have to cut something – or some people. A forecast can help them figure their way out. A forecast that accurately reflects the state of the business today allows you to scenario plan, best and worst case. What if you cut the team but then a big client comes through? What if you hang on, but you’re not able to make payroll. When you make those decisions based on data, rather than gut, you get closer to the right answer the first time around. No one wants to make cuts that are too timid (and don’t get the job done) or too aggressive (and hurt your ability to rebound).
Sales Outlook: Finetuning Your Forecast
“I never met a forecast I didn’t like.”
A wise owner once said that, just before going out of business.
That’s why we say sales outlook goes hand-in-hand with forecast. If your forecast thinks you’re going to have $500,000 of revenue for the next three months, but everything else is telling you, you’re only going to have $200,000, what are you going to do? It’s important to understand where that $200,000 sales outlook comes from.
As organizations grow into multiple salespeople or have separate sales and production teams, these measures can help everyone stay in alignment. Where are the deals, when are they closing, is production ready to service what sales is promising?
Sales outlook adds a healthy dose of reality to forecasting. Numbers look great when you put them in a spreadsheet. But the more mature your business is, the more disciplined you’ll be in marking what you know to be true about your incoming work, which is what will get you to a more profitable future.
From Start to Exit: How Profit-Focused Maturity Maps the Journey (and Leads the Way)
A short quiz – the Profit-Focused Maturity Assessment – will paint broad strokes about where you measure up in each area and provide actionable steps to move in the right direction. Then, the post-assessment individual consult will dig in deeper, with a conversation that starts with your goals and leads to a plan for our collaboration.
Starting from the assessment allows us to take a surgical approach to onboarding: You’re at a certain level in these areas, and at the end of 8 weeks, we expect you to be at this level. It’s an iterative process, where we prioritize the most impactful areas and tackle two or three at a time (often in the financial management area), until we’re ready for clean dashboards, which usually takes about 8 weeks.
Then, every year, we watch your numbers climb, both in terms of maturity and, as a result, enterprise value. We make sure your valuation is where you want it, so that when it’s time to exit, you get the number you need.
Profit-Focused Accounting is the underwriting philosophy that we developed over twenty years of experience, but now it’s standardized in a way that makes it easy for everyone to visualize the steps to get you there.