Category: Financial Analysis
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How Much Cash Should Your Business Keep?
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…
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Pricing Strategy Markup vs Margin
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…
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Unit Economics – Find Your Crown Jewel
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…
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Leading vs. Lagging Indicators: A Dashboard for Business Decisions
One challenge in managing finances is the overwhelming amount of numbers and metrics available to look at. Scoreboards in professional sports generally display only the most relevant stats, and your business should do the same. How do we handle it? Stick to 6-7 key metrics with a combination of leading and lagging indicators to watch…
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The Rolling 12-Month Analysis
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…
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Chartstravaganza: Charts for Small Business
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,…