THE CONSTANT FACTOR IN YOUR BUSINESS
The one thing that hasn’t changed about your business in the past years
Times have changed…there is no question about that. Freelancing has picked up over the last few years.
Technology has broken cost barriers that were fixed just a few years ago.
Seven & 8 figure companies with less than 10 employees have risen.
Automatic functions such as email campaign platforms or social media posting apps have increased your efficiency (getting more done with fewer resources)…but one thing has not changed:
Understanding how your business makes (& spends) money
Oh sure, your cost & expense structure might have changed. How you interact with clients & suppliers has changed…but your need to analyze your company’s basic financials has not.
You still need to know:
- how do you generate revenue;
- what are your costs & expenses composed of;
- how much have you invested in the company;
- what assets does your company have & how have you financed them;
- how long does it take for your company to collect from its clients…alternatively, how long does it take for it to pay its suppliers;
- how is it generating cash & where is it spending it on;
- is the return on your investment worthwhile;
- etc., etc., etc.
These questions are answered by performing basic corporate financial analysis. Nowadays, more & more software is being created that help you automate the financial information generated by your company. Are you taking the time to analyze them? Remember:
Just because there are more possibilities to becoming a 7 or 8 figure business doesn’t mean you can’t go bankrupt.
Analyze your company’s financial information in a consistent manner. If you don’t how to do it, get help from someone who does.
Giancarlo Jiménez, founder of The Finance Course, is a Finance Professional with more than 11 years of experience in the field of Finance and more than 4 years of experience teaching about Corporate Finance in a Business School.
Want to learn how to interpret Financial Statements & Ratios to make decisions at your small business? You can Sign Up To The Free Course byclicking here!
