Wouldn’t it be helpful to know the financial performance of other businesses with your exact same business model? It’s a surefire way to see if you’re leaving money on the table. “I believe in the discipline of mastering the best that other people have ever figured out.” — Charlie Munger What is benchmarking? After completing a financial review,…
Prepping the numbers This week, I gave a keynote to a group of franchisees outlining how to read and use their financial statements (a novel concept). It started with the idea of “mise en place.” If you’re not familiar with the thorough preparation phase before cooking, then let me give you some quick background: Mise…
Stepping back from our usual “small business strategies” to look at some macro trends and charts. Below are 3 groups of charts plus what they mean for small business… Enjoy! Consumer Health Retail sales, personal income levels, and personal savings rates. >> What it means: Consumer health went parabolic during the pandemic. Government programs (stimulus, unemployment, PPP,…
Today’s newsletter covers one of the greatest tools in all of finance, the rolling 12-month analysis. A rolling what? We’re simply looking at 12-months of financial information in every column of a financial report. This can be an incredibly helpful tool. Imagine having a year’s worth of financial data – every month. Before we look at…
Today we’ll cover a topic near-and-dear to every business owner – unit economics – we love thinking about how much we make on every sale! What are Unit Economics? Don’t be fooled by the fancy term… unit economics are simply the profits you earn on a per-unit, or per-service, basis (think: your margin on the sale of…
Most business owners have a loose idea of their unit economics (margin at the product level), but it’s usually: Your pricing strategy can make or break profitability… generally, I see companies fall into 2 buckets: those with revenue or pricing problems, and those with cost or expense control problems. Today, we’ll drill deeper into a pricing concept…
How do you know whether you have enough cash in your bank account? This is a common question in both business and personal finance. My guess is you’re taking one of the following approaches: Why should your cash balance matter to you? What about some strategies for determining cash reserves? Here are 2 simple approaches…
If I were to “drop in” on your business today, could you tell me how things are going this week? Most business owners don’t have a formal tool or process for monitoring early warning signs (both good warnings and bad warnings). These “tools” go by many names: KPIs, scorecard, dashboard, balanced scorecard, report card. Queue…
We’ve covered a wide range of topics this year and it feels like a good time to work through a case study for added practice. To keep things simple, we’ll break this into a multi-part series covering: My goal is to show you how to assess your (or others’) business from top to bottom. As I enjoy…
Last week, we kicked off a multi-post series working through a case study, Starbucks Corp. to be precise. We covered the business model, profit model, and unit economics and today we’re moving onto financial statement analysis. The goal for today is to show you how to pick apart a set of financial statements with ease. Quick…