Ask 10 different finance pros what their monthly review process looks like and you’ll likely get 9-10 different responses. So what is it? Monthly Financial Review (MFR) — Checklist of financial data and review procedures conducted every month (or 30 days) after your books are closed and financial statements prepared. After the month ends and your financials are…
Let’s look at a concept that can help both service-based businesses and product-based businesses with managing arguably their largest expense line. It’s called the Labor Efficiency Ratio (LER). What is it? It’s a simple but powerful metric used to measure the effectiveness of labor costs in any business. To calculate your LER, take your gross profit and divide…
There are probably 30-40 skills required to be a finance/accounting pro, but to manage a successful business you really only need to master maybe 10 or so… today we’ll cover one of those 10 skills… I call this zooming in and out on your business. It will help you see the bigger picture (zoom out) and…
1) The indirect method of cash reporting The indirect method of reporting cash flow is what you’ll see most often. It’s the standard format across QuickBooks, other financial software, and for publicly-traded companies. How it works There are 3 sections of cash flow With all the components laid out, it’s easy to see why profit is so…
How do you define success in your business? To me, it means the ability to take consistent cash distributions from a company. 1) Repurposing prices This tactic could work for both inventory and service based companies. Get creative on pricing. Instead of taking your slow moving inventory and deeply discounting it by 40-50% off, try…
An SMB tech stack An organized technology “stack” (tech stack) can save dollars and hours when it comes to running your business. A tech stack is simply the collection of software and tools powering your business, and the right collection can: Here’s a list of some categories and recommendations for inexpensive and highly efficient technology:…
How well do you understand the concept of depreciation and capital expenditures (capex)? Can you relate it to your own business or another business owner? It’s a tough one even for seasoned finance pros. This is the best explanation of capex I’ve ever come across (book revealed later): What is capex? Capex is money you…
Let’s take a look at one of the most useful tools in all of small business (actually, businesses of any size should be using this). Imagine a financial roadmap for the next three months. That’s what a 13-week cash flow forecast is. It’s a simple tool to predict your business’s incoming and outgoing cash over…