Navigating Profit & Loss: The Ultimate Guide to Sustainable Business Finances
<p>In today’s dynamic business landscape, it’s surprising to learn that many companies still operate with incomplete financial data for their day-to-day operations.</p>
<p>This issue revolves around what I have learned to call the “POT” theory, a financial approach that some businesses continue to follow despite its inherent risks and limitations.</p>
<p>Years ago, I was introduced to this concept by one of my mentors, and it seemed perplexing to think that companies operated in such a manner.</p>
<p>However, as time has passed, I’ve encountered numerous businesses that lack a comprehensive understanding of their true costs and rely on this “POT” theory to guide them.</p>
<p>The core of the “POT” theory is simple: companies start the year with a sum of money in the “POT” or actually the bank.</p>
<p>At year-end, they take a look inside this metaphorical pot to determine whether they’ve accumulated more money (indicating profit) or less (indicating a loss).</p>
<p>This approach is not ideal for running a successful business, yet it persists.</p>
<p>Many small businesses either do not possess the complete financial data they need or fail to track it effectively.</p>
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