Category: Business Financial Planning
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Financing Your Dream: Practical Tips For Small Businesses
Small businesses are the backbone of most economies, driving innovation, creating jobs, and fostering competition. However, securing financing for a small business is not always a straightforward task. Here are some essential tips to help guide your journey to securing the funding you need. Maintain Accurate Financial Records One of the first things lenders will…
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The Art of Fundraising: Beyond VC Funding
Venture capital (VC) funds have long dominated the headlines in the startup world, but the truth is that they fund only a fraction of all startups. While they can be beneficial in some cases, taking VC funds often comes with high costs and a significant loss of ownership. However, in today’s dynamic business landscape, there…
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Inventory and COGS: Key Concepts for Business Financial Success
In the world of business accounting, two terms that are often used interchangeably are “inventory” and “cost of goods sold” (COGS). However, it’s essential to recognize the significant difference between these two concepts, as they represent distinct stages in the process of producing and selling a product. Let’s delve deeper into inventory and COGS to…
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Mastering The Art Of Pricing: Strategies For Profitable Product & Service Pricing
Crafting the right pricing strategy is a fundamental element for the success and profitability of any business. However, pricing is not a one-time task; it requires ongoing efforts and adjustments. As you establish your new business, you will likely need to fine-tune your prices until you find the optimal formula that boosts sales and profits.…
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Reducing Financing Costs: 6 Strategies For Businesses To Boost Profits
In today’s competitive business landscape, strategic planning is crucial for companies to stay ahead. One key aspect of strategic planning that often goes overlooked is managing inventory and receivable financing costs. These costs can have a significant impact on a company’s bottom line, and understanding how to effectively reduce them can lead to improved financial…
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A Comprehensive Look Into Crowdfunding For Business Startups
Starting a business can be an exciting and daunting task, especially when it comes to funding. Lately, I have been asked about an increasingly popular way for entrepreneurs to raise funds for their business startups. With the rise of online crowdfunding platforms, it has become easier than ever to connect with potential investors and secure…
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Secure Your Financial Future: Learn How To Create & Maintain Healthy Cash Flow For Long-Term Success
Creating healthy cash flow is essential for businesses of all sizes to thrive. Cash flow is the lifeblood of a company. It allows you to pay bills, reinvest in the business, and make long-term investments. The value of a business is tied to its ability to maintain healthy cash flow and generate sales. Cash flow…
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Creating A Budget That Works For You
A business budget is a tool that can be used to track and manage a company’s finances. It allows the company to see where its money is going and where cost cuts can be made. A budget is also a tool to help when planning for future expenses. Every good budget should include six components:…
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Four Common Budgeting Mistakes (And How To Avoid Them)
Most people think budgeting is about money. Budgeting is actually about SMART goals (Specific, Measurable, Attainable, Relevant, Time-Bound). Money is simply the tool a budget uses to achieve those goals. First the SMART goals need to be identified before the money can be defined to accomplish them. Here are four budgeting mistakes you may be…
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What Is Cash Flow?
Lately, several new startup entrepreneurs have asked me to define cash flow. Cash flow is the term used to describe the movement of cash into and out of a business during a specific period. Companies analyze and track three different types of cash flows: the cash flow from operating activities, investing activities and financing activities.…
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The Funding Paradox
You need to show you can make money to raise money, but you need to raise money to develop and sell the product/service offering to make the money to show the investors. This is not the first time this paradox has suddenly dropped into an entrepreneur’s lap. In fact, it’s a cycle that I have…
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Assessing A Company’s Health Using Financial Analysis
By themselves, financial statements tell you quite a bit…like, how much profit the company made, where it spent its money, how large its debts are. But how do you interpret all the numbers these statements provide? Is the level of debt healthy or not? If you’re looking to assess the health of your company &…
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Thoughts About The Cash Flow Statement
Differentiating between one-time and ongoing expenses is key. One-time costs include obtaining assets like equipment or machinery, but may also involve licenses or permits for certain businesses. These costs usually occur during the startup phase or when a business expands. Expenses that must be paid monthly or periodically (like quarterly) represent ongoing costs. Variable costs, however, will…
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Thoughts About The Income Statement
Of the three main financial statements, the income statement generally has the greatest bearing on a manager’s job. That’s because most managers are responsible in some way for one or more of its elements: Generating revenue. In one sense, nearly everyone in a company helps generate revenue…the people who design and produce the goods or…
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Thoughts About The Balance Sheet
It is important to understand how to use balance sheet ratios in managing your own business area. Let’s start by looking at a couple of ways in which balance sheet figures indicate how efficiently a company is operating. Working capital. Subtracting current liabilities from current assets gives you the company’s net working capital, or the…
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Keep Personal & Business Finances Separate
It can be difficult to keep your personal and business finances separate when you own a small business. It is especially challenging to keep your accounts divided if your business is structured as a sole proprietorship. Since sole proprietorship is considered a nonentity, there is no legal separation between you and the business. When you…
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How Independent Contractors Budget
During a recent workshop, I was asked if independent contractors can really operate using a budget…if so, how do they budget? Yes, independent contractors can make a monthly budget even though they live the 1099 life. Here’s how. The concept of a monthly budget is a no-brainer for people who rake in a regular paycheck…
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Fundraising Pitch Deck Mistakes
Since I raised over $20 million in venture capital for my businesses from top-tier VCs, new founders often ask me to review their fundraising pitch decks. Over and over again, I see early-stage founders repeat the same mistakes, reducing and sometimes eliminating their chances at funding. Here are four of the most common ways a…
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Business Valuation Methods
Whether you’re thinking of selling your business or you’re looking for new investors, there may come a time where you need to evaluate the economic value of your business. Determining the value of a business isn’t simple. It requires accounting for a number of factors within your business finances. Because this process is so complex,…
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Key To Fund Raising
When starting the process of raising funds for your startup, make sure to start on the right foot. Over my 40 year business career, I have raised millions of dollars to fund my startups. I learned that the three most important words you need to remember when going out to raise funding for your startup…
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Calculate Gross Profit
Since my last post about understanding the difference between markup and margin, I have been requested to explain how they tie to gross profit. One of the most important financial concepts you’ll need to learn in running your new business is the computation of gross profit, and the tool you use to maintain gross profit…
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Know Your Business Credit Score
What Is a Business Credit Score? As an individual, you most likely have a consumer credit score, a measure of your creditworthiness that allows lenders to compare you with other people. It’s a single number that’s built using data from your detailed credit report. Likewise, your company may have its very own business credit report…
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Common Accounting Mistakes
Over many past years, I have helped hundreds of business owners grow and scale their businesses. I have had the privilege of helping business clients increase their revenue in a short period of time by teaching them how to create systems and controls and making smarter business choices. Unfortunately, for many business owners the process…
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Breakeven Analysis – The Key
How many units/service jobs do you need to do on a daily basis to breakeven? To begin to predict where you begin making a profit in your business, you need to know the Breakeven Point…that moment of sales and expenses when you can breath your first sigh of relief. Most businesses spend their first 3-5…
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Financial Terms Glossary
Listed below are some everyday financial projection terms that I was requested to define in common terms during a recent business financial event. For more information on business financial planning be sure to join Small Business Thoughts for free and search the Library at http://www.smallbusinessthoughts.com. accounts payable Money owed to others for goods and services…
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Varying Degrees of Balance
Here are some observations about how profit and cash flow can exist in varying degrees of balance when you make financial projections for your business: By definition, profit (also called net income) is the surplus after all expenses are deducted from revenue, and it is the basis on which tax is calculated. On the other…
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Understanding Business Accounting
Six Groups That Do Business with a Business Six main groups are intimately connected to the life of a business. Knowing who they are, what they expect and how you’re interacting with each of them is essential. Customers, who buy the products and services that the business sells. Employees, who provide services to the business;…
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Finding Cash – Reduce Inventory & Receivable Financing
According to one report I recently read, 38% of businesses fail because they run out of cash. All companies are dependent on cash flow. But managing money is not a skill that all small business owners have. Some entrepreneurs are visionaries, while others are more focused on business growth. If you want your business to…
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Finding Financing – The Elevator Pitch
An elevator pitch needs to be distilled down to a single nugget of truth.
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Success Isn’t Binary
A lot of people I have talked with assume that success is binary, which means everything that isn’t success must be failure. But the opposite of success isn’t failure. Or, it doesn’t have to be. And, that’s a distinction that can make all the difference. Unfortunately, it’s one that many people never learn to make.…
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Cash Flow Management – Surviving Shortfalls
Cash Flow – Your First Priority A lot of business think of Forecasting Cash Flow last, but I would argue it should be first. It is imperative to prepare cash flow projections for next year, next quarter and, if the business is on shaky ground, next week. An accurate cash flow projection can alert the…
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Business Financial Planning
It’s amazing how deeply ingrained those things are that we’ve been told and practiced, but never spent the time to think about on our own. Don’t give the answers, just ask the questions!…that is how to peal away the wrong ingrained thing. This is true when people are asked what is the goal of their…
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Financial Savvy Test
Quiz & Answers: True or False: The more a company sells, the more it earns…False. Many companies aren’t even aware that on some or even most of their products or services they are selling at a loss. I can even remember one CPA firm I coached that was shocked when I showed them that they…
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How To Start A Budget
Every successful business needs a budget, and here are some tips on how to make one that works for you. It’s a basic tenet of business – before you can make money you have to figure out how to spend it. Drafting a budget is a key way to help you turn your dreams for…