Don’t shoot yourself in the financial foot. Stay clear of common financial mistakes by following these 9 financial concepts.
- Cash is “king” so keep a handle on your cash by reviewing your cash flow statements, your weekly cash receipts, and weekly or daily cash balance.
- Understand what would be the right mix of debt vs. equity in your business. Each business has its own “speed limit” and growing too fast can cause you to pile on debt and thereby, risk to the business.
- Have a written plan even if it’s a short one page which I prefer. The lack of a plan is the plan to failure.
- Know how to read your financial statements, and not just you profit and loss statement but also your balance sheet and cash flow statement. Otherwise it will be hard for you to make good decisions for the business.
- Know your costs. This is especially true to understand at what point of your growth will you need to add more fixed cost to the business in order to go the next level.
- Keep up good relationships with your bank and vendors. These are your key stakeholders who can make the difference between success and failure.
- Missing the “forest” because you are only looking at the “trees”. You are missing the bigger picture of your business and industry. Understand the trends and be able to step back from the business to see if you are driving in the right direction.
- The absence of timely data from operations and finance. If you are waiting 30 days or more to review this data, its most likely too late for good corrective action and rather you will be more in a reactive mode.
- Lack of understanding the cause of the results. Get to know the drivers of your business including your financial drivers. These metrics will provide insight into the direction you are heading.
Follow these 9 key strategies and you will get the financial results that you want. Here’s to achieving your financial goals!
Mike