Category: Cash Flow Management
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[Monthly Metric] Tracking Collections with DSO
Metric of the Month: DSO “The first rule is that a measurement, any measurement, is better than none.” — Andy Grove This will be a new monthly series as part of our regular newsletter. There are too many financial metrics and most articles are long on definition, short on “what do I do with this?”…
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Try Using This Underrated Financial Metric
Nice Assets “The goal is not to grow bigger; the goal is to grow better.” — Peter Drucker What’s your favorite underrated financial metric? (seriously, reply and let me know) Mine is the asset turnover ratio (total sales divided by total assets), and I finally came across a great example of it in the wild: fast-casual restaurant chain,…
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About to run out of cash? Here’s what to do
Most businesses fall into 3 buckets: Let’s start with a brief “playbook” on managing a tight cash situation in an attempt to move from the first bucket to the 2nd bucket: Many of these are straight out of the turnaround playbook with an emphasis on short-term cash management. These tactics are best suited for struggling…
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The Cash is IN the Balance Sheet
The general usage of financial statements by business owners goes something like this: Finance teaches us that the P&L measures profitability while the balance sheet is just a snapshot of what we own minus what we owe at a single point in time. But there are a few secrets tucked inside the balance sheet… Secret…
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Avoid Cash Crunches with a 13-Week Cash Flow Forecast
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…
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Understanding Labor Costs
Looking at Labor Dollars Some common things I’ve heard when it comes to managing the financial side of labor costs: Most of these are anecdotes, and that’s how I see most companies running their business from a labor cost standpoint. We’re hosting a webinar for members next week covering labor efficiency (save your spot below). So consider…
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Capex 101 — Investing for Growth
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…
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A Guide to Your SMB Tech Stack
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:…
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Top 3 Cash Flow Tactics
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…
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A Quick Guide to Managing Labor Efficiency
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…