Why understanding your finances is essential in business
David Betts
?? The Change Facilitator for Businesses ?? Grow Profits ?? Free Up Time ?? Your Team Working With You ?? Business Coach ?? Motivational Speaker ??
“Turnover can be one of the most expensive problems at a company,” – Shawn?Achor.
Knowing your company finances is vital for gauging your business's performance...
It's critical to establish a financial target for your business for the remainder of the year.
Much like a sports team requires knowledge of the how many victories and goals they need in order to win the league, a business owner must understand their company's break-even point and when profitability begins.
You, as the business owner, need to keep on top of your finances to know what is happening in your business and to be able to predict what might happen in the future.
Growing a business involves delegation and establishing systems, enabling your team to handle routine tasks and allowing you to focus on strategic business development rather than day-to-day operations.
Failure to delegate can lead to future complications. You need to master your finances to know what is happening in your business and to be able to predict what might happen in the future.
Here are a few pointers I recommend to the business owners I coach in Essex and Suffolk.
In your business, you need to know:
? Your actual profit margins
? Which products makes the most profit
? Which products you need to discontinue.
In order to predict your cash flow you need to:
?? Track anticipated incoming cash
?? Record your budgeted expenditures
?? Monitor the impact on your bank balance going forward
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?? Update these figures with actual data to refine forecasts.
Here are strategies to enhance your cash flow:
??Require upfront deposits
?? Complete and invoice projects promptly
?? Send an invoice immediately a job is completed
?? Systemise your invoicing process
?? Complete your invoicing process on a weekly basis
?? Offer 7 day payment terms instead of 30 days.
If payments are overdue, escalate your invoicing frequency and firmness at 14, 30, and 40 days.
Exercise caution with discounts, as they can significantly reduce your profits.
How are your finances looking?
Have you set a goal for the rest of the year?
I hope this brief guide has been beneficial.
I help business owners get exceptional results in their organisations.
If you're interested in discussing your business's financial health, please contact me at 01206 794373.
CREATIVE CONTENT SPECIALIST II helping you turn your LinkedIn content into a client-magnet, so you stop chasing leads and start attracting inbound opportunities.
5 个月David, you make an excellent point about budgeting as a cornerstone for financial mastery! To truly transform your budget into a powerful tool, consider these steps: Track your expenses for a month to identify spending patterns. Set clear, achievable financial goals—both short-term and long-term. Regularly review and adjust your budget to reflect any life changes. This approach not only empowers you to make informed decisions but also keeps you accountable. Can we keep the conversation going on how to master financial health?
Founder & CEO of Dropship Unlocked | E-commerce Mentor | Author of The Home-Turf Advantage? | Helping Entrepreneurs Achieve Financial Freedom | Learn how you can start: DropshipUnlocked.com/free
5 个月Financial literacy in business isn’t just about control; it’s about making informed decisions that support growth.
Looking to grow your sales without selling; let me show you how to make sales calls without selling; effectively, confidently & ethically.
5 个月Getting your financies in order are key to running any business. However, let's see what is said tomorrow by 2 Tier Keir.
Founder & CEO of Gamaal | Speaker | Board Member | WEF25 | 100 Women @Davos | Start-up | Impact Entrepreneur | 1Club Member
5 个月Let's hope it brings some positive outcomes for businesses. Thank you for this insightful article
One needs to curb fear at this stage David Betts The positive mindset is essential to take stock and chart a way forward if things are not the way they should be