As a business owner, one of the more important things you need to safeguard is the financial health of your business. Whether you own a startup or a stable company, constantly assessing how your business is holding up financially is essential in helping you achieve your financial targets. To do that effectively, you should be more well-versed when it comes to the actual factors that could wreak havoc to your business
. Here are some things to stay clear of:
The thrill of putting up a business for the first time or releasing a new product can often be overwhelming, so much so that business owners get lured into overspending on their inventory. Do not fall prey to this. Excessive inventory can add a strain to your business financially, especially if you find difficulty in selling them before it expires or becomes outdated.
Uncollected accounts receivables
A business should have an effective credit collection system in place to keep accounts receivables updated and settled on time. Otherwise, the delayed or uncollected receivables will likely stunt your business growth. Worse, it could also lead to serious problems in your cashflow, especially if your other sources of income are not that steady to begin with.
Irregular net income
Your net income plays a major role in determining your overall business financial health. By taking a look at your net income, you can set your financial targets and make informed business decisions about expansion or investment activities. While your net income cannot be set in stone due to varied sales activities at different intervals, it is important to note that drastic changes in your net income - specifically, a drastic drop in your net income - is a red flag for your business.
Insufficient working capital
Putting up a business does not come cheap. It goes without saying that you need to have sufficient capital to fund whatever it is that your business needs to operate in full swing. To that end, you need to make sure that your working capital is at a good rate. If not, the chances of your business staying afloat will get quite slim.
Unused fixed assets
Fixed assets - such as added machinery for production - are important for a business. This is an understatement. But if your business fails to make good use of it, it will only become a liability and thus, will become an additional financial burden.
Assessing your business financial health is a great way to help you determine how your business is doing and how close you are to hitting your business goals. More than anything else, it also equips you in making better and more informed business decisions.
At FAS, we offer ways to help you up your business financial game. Contact us today and get a free industry report valued at $200. This will give you financial benchmark of how your business is doing against your competitors.
We help you plan, forecast and analyze your financial data
so you can get on top of your finances today to grow your
small business big tomorrow.
Should you buy a business vehicle before year end?
5 Ways to Dance Through Digital Disruption
Find the Right Path Forward With KPIs
Ensuring a Peaceful Succession With a Buy-Sell Agreement
Intelligent Insights: A CFO's Strategic Methods for Cost Controls
4 Surefire Ways to Sustain Business Growth
Top 8 Financial Tools for Small Business Owners
Small Business Owners' Top Tax Mistakes and How to Avoid Them
Top 5 Bookkeeping Systems for Small Business 2017
What Are Your Financial Statements Telling You About Your Business?
Small Business StartUp New Research Credit Claims, Explained
Financial Tools: Useful List for Growing Businesses
Capital Budgeting Techniques Maximizing Future Profits
Key Profit Drivers You Should Not Ignore
Small Business Tech Trends: Power of Cloud and Mobile Bookkeeping
Growth Game Plan: 30+ Ways to Improve Profitability
Medical Practice Growth Strategies: Improving Profit Margin for Doctor's Clinic
Is Your Business Growing? Profit and Loss Explained for Small Businesses
How Profitable are your Customers?
Dont Let Founders Syndrome Impede Your Succession Plan
Bridging the divide with a mezzanine loan
Critical connection: How costs impact pricing
4 Ways To Get (and Keep) Your Business Data in Order
Valuation often affects succession plans in hard-to-see ways
How to Maximize Deductions for Business Real Estate
Fortifying Your Business With Enterprise Risk Management
4 Tips on Making your Marketing Emails a Blast
Fun fact: Phone service was taxed early and has been taxed often ever since.
Could an FSA Offer the Benefits Flexibility You Need?
Get Smart: How AI Can Help Your Business
7 Steps to Choosing a Successor for your Family Business
Year-End Bookkeeping Reminders You Dont Want to Miss for your Non-Profit Organization
Can't Keep Up with the Deadlines? 6 Tips for Attorneys to Achieve a Stress-Free Year-End Tax Preparation
6 Key Points that Construction Companies Must Have to Prepare for the Year-End Financial Closing and Tax Filing
Find Time for Strategic Planning
Making the Right Choice About Your Office Space
8 Things You Should Consider for Compliance When You Hire Independent Contractors
Light A Beacon to Your Business with A Mission Statement
Turning Employee Ideas Into Profitable Results
Use Bench Marking to Swim With the Big Fish
5 Questions to Ask Yourself About Social Media