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.
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