Starting a business is easy. People do it every day. Maintaining a business, keeping it strong, and making wise financial decisions is quite a bit more difficult. According to some research, 50 percent of new businesses will fail within their first five years of operation, and 70 percent will flop within 10 years. There are many reasons for these failures, but one area that most businesses desperately need to consider is following best practices for financial growth. To if you want to do this, purchasing a solid, reputable
1. Keep track of sales-to-expense ratios on a monthly basis so that you know when to adjust your spending.
2. Formulate a long-term capitalization strategy to consolidate earnings with short and long-term debt.
3. Consider hiring outside help, such as an accounting consultant.
4. Report routine quarterly financial statements with a balance sheet and profit/loss reports. (the kind of reports that come out of a
5. Calculate accounts receivable and accounts payable days and their effect on working capital and cash flow.
6. Know the difference between cash and accounting, and determine a 12-month projection of cash flow.
7. Know the top three financial indicators that stand in the way of your company's profitability.
8. Monitor levels of inventory as they relate to projected sales, receivables, and cash.
By CAL Business Solutions,