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…
What’s your financial cadence? Business owners have a typical financial review process that goes something like this: Financial statement analysis is the primary tool when it comes to evaluating business performance (I’ve said this before). There’s a “what” component and a “when” component to that analysis; here’s a simple routine that should work for most…
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…
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…
You’re probably sick of hearing about working capital. Every business has working capital and next to cash, working capital is the lifeblood of every business. (If you think you don’t have working capital in your business, please send me a note, I want to hear about it!). First, what is working capital? Here’s a Net Working Capital…
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…