Is Your Business Financial Healthy?
Understanding your company's financial health is essential to creating a strong, profitable, sustainable business. Financial tools like key performance indicators (KPIs) and ratios which measure financial health as well as budgeting, forecasting and industry benchmarking are all tools that can provide crucial business insights that help you make better financial decisions.
Cash is King
Many business owners equate the success of their company to reported profits. And while profits are great, they do not always adequately represent the financial health or value of a company. Cash flow is perhaps the most important determinate of a company's scalability as it is very possible for a company to be profitable with positive net incomes but still not be able to grow or secure financing because of poor cash flow. Cash flow reporting provides a more straightforward understanding of the cash available than a company's Profit and Loss because a company can appear profitable “on paper” but not have enough actual cash to replenish its inventory or pay its immediate operating expenses such as payroll, lease or utilities.
Pricing and Revenue Streams
How you set prices can have a host of implications for your business. Not every price you set needs to maximize margins or profitability, in fact many small businesses use price to compete, change market share, or create different revenue scenarios. Understanding how pricing affects your business model, not just your bottom line, will help you better choose price levels. Building flexible pricing models and understanding how to create different streams of revenue for your business can help you manage cost of goods or expense increases, maintain consistent profitability and cash flow and reduce overall risk.
Financing and Funding
The strategic use of financial instruments, such as loans and investments, can be critical to the success of any business. The ability to secure financing allows a company to take advantage of growth opportunities and secure its' future. How you present your financial information to an institution is just as important as how you negotiate a loans that make sense for your business as well. I have worked with a number of business to secure financing from $1M to $6M and can help you navigate the process to make sure the loans work for you and your business.