Understanding business numbers

 

Across the globe, many have found numbers to be intimidating. I used to think that numbers communicated quite clearly everything except emotion until I saw someone win the lottery or get a fine. 

In business, there's a requirement to have the entity's performance represented in numerical reports called financials. Despite this, the full potential of the information the numbers represent is seldom communicated in whole or understood by the reader. 

This may be one of the reasons why businesses grow to a certain performance level and then stagnate - neither growing nor declining. 

The numbers are able to describe matters pertaining to the following areas:

• The asset base and the level of liabilities
• The profitability of the entity
• Cash flow 
• The earnings per share 
• Share value 
• Units in production 
• Internal cost controls 
• Ratio analysis
• Cost-Volume-Profit Analysis 
• Forecasting methods
• Operations budgeting 
• Cash management 
• Capital budgeting 
• Tax planning

The bulk of these elements seldom forms a part of the discussion at yearly AGMs/management meetings if they are held. 

In short, we leave money on the table, even when professionals are paid to guide us through the process. These numbers can and should be used as a means for setting goals and then reviewing to see how close we have come to realising them. 

It is time to stop playing business and get the necessary professionals on your team to help you navigate what you don't know. No one knows everything. Some of the best use of the business' resources is to invest in the use of professionals to which you have access to enable you to make and save your business' money. Too many people are seeking to do business on the cheap, which isn't budgeting by any stretch of the imagination. 

If you don't understand some of the areas listed above, then please seek out your professionals to enable you to obtain clarity. Learn how to make the numbers of your business work for your benefit. 

Small Business Reaction to Accounts Receivable

You're getting into business and there's a lot of thought going towards the money you'll earn and the profits you'll make. Along the way, you get a wake up call when you begin to do business. Realizing that it isn't a dream and it is in fact very real, the revelation is, you can go out of business while making a profit. How can this be so? It's because there a stoppage of your cash inflows. You realize that any of the following can describe you.

• There's more month than money. 
• 911 stopped the mail but the bills still get through. 
• You just got back in from paying the bills only to find the next set of bills there, on point, ready for payment. 
• THEN you realize - that some people owe you, haven't paid up yet, and every time you talk to them there's a different hard luck story. 

Hmm. 

Your thinking goes through a series of points

• Things rough all around, it'll soon work out, and I'll get paid. 
• Maybe if we look at a payment planning, we can get the balance to come down.
• "Why am I being stressed to pay my bills and the people who owe me are all cool and relaxed" 
• They better have the money ready today. 
• "Why do I have to work for my money and then turn around and beg for it?"

Then it get's extreme. 

• If they don't pay my [your choice] money today someone's gonna get hurt big [your choice] time. 

Now different reader reactions may come from the last extreme thought, but you know it's true. Even if you're good two shoes. When the pressure's on, you can sometimes have rather unholy thoughts. 

Small business owners, you must consider this:

1. Don't give anything on credit that you're not prepared to give for free. Always collect your money on or before delivery. 
2. Have proper record keeping systems in place and ensure your operations are air tight. 
3. Always be known for delivery of sound products / services in a timely manner. Your clients will be more inclined to pay on / before delivery of your offering. 
4. Have clear written policies on your invoices. Many people no longer honor their handshakes. [Sometimes contracts aren't worth the paper they're written on] 
5. Always collect deposits. Why should you invest more in someone's interest than they are willing to put in themselves. 

When doing business. There's one result that you should require for the work that you do. 

Here it is! 

Remember, accounts receivable affect small business owners even more directly than that it would larger businesses.

Richie B. is responsible for Business Development with Blades & Blades Consultancy Services LP. He has experienced many successes for his clients over time and enables them to realize their business dreams. The above information will help you fast track your business to success; saving you time and earning you money.

Starting a business....are you serious?

Entrepreneurship is a word that's touted about a lot these days. Everyone seems to want to begin a business of their own, and who can blame them. There are certainly better educated, greater connected, and have more resources. However, you can imagine the questions that come to mind when we look at todays businesses. Let's look at a few.

• Why do so many of them fail?
• Do we really know why we want to be in business?
• Have you thought out the process well?

Let's stop at these three. Since these alone can take quite a bit of time. Let's look at them succinctly.

Businesses fail due to:

• Being under capitalized
• Poor operating systems 
• Weak marketing & sales 
• Poor accounting & cashflow management
• Weaknesses in human resources - training deficiencies
• Lack of discipline and planning
• This list is not exhausted

We want to be in business for a variety of reason

• Some don't want to work for someone else
• Others just want to be their own boss
• There are still others who just want to be creative and can't be bothered with much else
• Many want to make money that they can spend as they wish
• They saw someone do it and it looked easy
• Many don't like their current bosses 
• Some want to genuinely make a difference in the lives of others with their product / service
• The reasons are endless 

We thought

• This would be a walk in the park
• This much strategy was not required
• We could do it ourselves without much expenses or help as we know our field
• Why did we leave our jobs, we had it made when we got our payment from where we were employed (and, we didn't have to work as hard)
• We didn't want this much work, just more money. 
• We didn't have a vacation since leaving our last jobs and we don't have money to go on vacations either 
• If I had only known better, I wouldn't have left 
• Well, we're too committed to turn back now. 
• If I could do this all over again, I would do this so much differently

Business is never easy. As one friend put it, you have money problems either-way - too little / too much. There are many who believe that they wouldn't mind having too much money. It is often heard said, I know exactly what I would do with that money if I had it. 

So are you serious about starting a business? If not, please don't. It would be more trouble than profit. However, if you are, then you need to make contact with someone like me in your area. There are plenty great consulting resources out there, and they are some that aren't so great. You must do your due diligence. 

So starting and expanding a business, especially when you are serious can be quite rewarding. Surround yourselves with others who have achieved some of the things you desire - learn from them taking the good and leaving the bad behind. Yes you'll find many have flaws that make it difficult to work with them. Be prepared to endure, so that you can enjoy.