Keep your eye on these financial yardsticks
Good financial management is essential to allow business owners to make proper decisions through the year as business conditions change. Periodic quarterly or annual reviews are not adequate.
Performance should be reviewed monthly against goals established for the year.
Key indicators to review include:
· Revenue Growth: are sales increasing year over year and meeting targets?
· Profitability: is the business making adequate profit compared to goals. Are profit margins improving?
· Liquidity: are short term obligations covered?
· Cash Flow: are you generating sufficient cash to operate? Is bank financing required to help fund growth?
Sometimes businesses can measure their performance against competition within the industry. That may help highlight areas where improvement may be needed.
These were just a few considerations. Please let me hear your thoughts.