Is Lack of Financial Discipline Hurting Your Business? Financial Tips For Success in Business
It will blow your mind if you know how your business is being hurt just due to the lack of financial discipline. Do you have someone that helps you stay financially disciplined both in your business and personally? Do you listen?
Financial Questions to Consider
- Have you used cash flow forecasts to determine how much money is needed to fund your growth?
- Do you know how much of that you need to fund before banks and other external sources will agree to contribute?
- Do you take money out of the business before considering how it will affect your growth?
- Do you know how much cash you must leave in the business to cover taxes?
- What is your reputation with vendors?
Financial Tips For Success in Business
As you can easily imagine, the client I’ve recently been writing about who lost millions in the sale of his business did not have good financial discipline. Fast facts to consider:
1. Raising Money
Fancy presentations, fast talking and nice smiles will not hide that you have bad personal credit, pay your creditors slowly, leave no money in the business, and overpay yourself. In general, good investors do their homework and recognize poor fiscal management in a business.
2. Leader Resentment
When partners and fellow leaders see you draining money from the business (and they will), they lose momentum because they feel that their hard work is going to waste. This then develops into an entitlement issue: the aggrieved parties demand much higher salaries, which either turns into further dilution of cash or further loss of productivity. Either way you lose.
If you create budgets and don’t adhere to them, they do not really exist. With rare exceptions for outstanding individual contributions, there should be no raises unless the company is growing. If the company is growing less than forecast, raises should be commensurately lower.
4. Balance Sheet
Pay particular attention to your balance sheet. Cash is king. Cash is where you build your ability to grow and handle unforeseen circumstances.
Maximize Business Growth & Profit
If you are interested in speaking to a business coach and maximizing your growth and profits, let’s schedule a time to further discuss your business. Call Howard Shore for a FREE consultation 305-722-7213 or contact Activate Group, Inc. today.