Tag: Business Financials
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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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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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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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Facing An Inflation Price Increase Decision?
In the past, I have talked about adopting a pricing strategy that aligns your business value proposition (VP) with your cost of goods sold (COGS). In other words, set pricing by ignoring your competition and focus on customer value. By focusing on the value to the customer (removing their pain point), you immediately take the…
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Marketing Analysis Math – Don’t Freak Out
In its simplest form, business is math. If the unit economics work in a businessʼs favor, then the business will succeed, otherwise, the business will fail eventually. Even if youʼre math-phobic, there are a few essential metrics that you should know to better serve your business. I know, there might be others who are able…
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Financial Questions For A Startup
One of the questions I get asked when mentoring startup entrepreneurs is “How much money do I need to start my business?” A Shopify survey of 300 small business owners and 150 aspirational entrepreneurs in the U.S. found that they spent, on average, $40,000 in the first year of business. While some businesses still require…
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Steps To Selling Your Business
How to Sell Your Business You only sell your business once. That thought may be enough to keep you up at night when you decide it’s time to cash in on your years of hard work as if there isn’t enough pressure associated with every step of the sale of a business. But there’s much…
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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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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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Difference Between Markup & Margin
Markup is a term you hear tossed around from time-to-time…such as “that store really marks-up their products” but what does that actually mean? A markup is, technically, the amount thatʼs added to the cost of a product to derive the selling price. For example, a cheese retailer that wants to have a minimum of 50%…
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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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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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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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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…