Efficiency vs. Profit vs. Family Balance – The Annual Business Financial Review
As I have moved into my 4th year of my business, I have an “end of year” ritual that I start just before Thanksgiving. And it is not easy. Sometimes maddening. But I have found it helpful to my bottom-line.
What expenses can I cut for the next year?
If it were that easy. At the same time, there are rules to this exercise. My decisions have to meet four criteria.
It cannot affect my client’s overall experience or outcomes.
It cannot affect my overall ability to be a son, husband or father (time).
It cannot materially change the way I deliver my services (unless it makes it better).
It cannot dramatically affect my business development process.
Striking the right balance between business expenses, investments, and savings is a dynamic decision-making process that requires a clear understanding of priorities and trade-offs. I must evaluate how each dollar spent aligns with immediate needs, growth opportunities, and long-term stability.
I start by differentiating between operational necessities and strategic investments. Operational expenses should be lean and focused on efficiency—streamlining processes that can free up capital. Investments, on the other hand, should prioritize initiatives that directly support growth or competitive advantage or client experience. I evaluate potential investments by considering ROI, alignment with business objectives, and risk tolerance.
Savings decisions often conflict with investment opportunities, making it vital to assess the bigger picture. Allocating resources toward savings strengthens financial resilience, but underinvesting in growth can limit future potential. At the same time, I am always trying figure out, beyond business development, how do I create better outcomes for clients.
Decision-making is informed by robust data and guided by both short-term performance goals and long-term strategy. Regular financial reviews, scenario planning, and stress-testing ensure the business can adapt to market changes while maintaining liquidity. Additionally, getting outside perspectives promotes diverse thought, helping to prioritize initiatives that deliver the greatest value. And most of the time, that is my amazing wife as I run thoughts/plans by her to get her gut reaction. While not being business/money person at all, she has an amazing ability to “see around corners” of things I miss, giving a critically balanced 2nd opinion.
Ultimately, the key to balance lies in staying agile—cutting unnecessary costs, seizing calculated investment opportunities, and maintaining a safety cushion to manage risks. A disciplined yet flexible approach ensures resources are allocated effectively to fuel growth and sustain the business through uncertainty.
I really enjoy the process. I love strategy thoughts/decisions. It reminds me of many conversations with my father, who had his business. And while not as “formalized” as what I do now, Dad was always trying to do the same. In the end, it is about making what you do better/greater outcomes while being more effective/efficient while always remembering what is most important (family). A worthy annual effort.
