How to Weather This Financial Storm as a Business Owner
Many small business owners are worried about the financial wellbeing and lasting legacy of their businesses right now.
As understandable as it is to be concerned, there are action steps you can take now to ensure your business can weather this storm. On the other hand, if you hide yourself from the numbers – afraid of what they will forecast – you may be setting yourself up for greater troubles down the road. It’s best to address this challenge head on.
Today, I want to give you some of the strategies I share with my clients that can keep your business thriving in times like these.
First, let me ask you… Does the financial side of your business intimidate you?
If so, trust me when I say you’re not alone. Often the creative types who are driven to be innovative, pave their own paths, and build their own businesses don’t find numbers engaging. They’d rather be networking, selling, marketing – anything but number crunching. Can you relate?
That’s why it’s important to breathe life into your numbers, so you can see why they matter.
“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.” Alexa Von Tobel
You don’t have to be a human calculator, but you do have to understand the business of numbers. Learn to understand the power of numbers and you’ll add tremendous value to your business.
To be successful in any business venture, there are a few key numbers you should always know. Why? Because these figures are key indicators that directly impact your bottom line. They’re the signs that keep us alert to whether we’re gaining momentum or chartering dangerous territory.
Fundamental Financial Figures
Cash flow – Cash flow is the amount of net cash generated by a business during a specific period. Because cash is the fuel that ignites a business, many consider cash flow to be a company’s most important financial indicator.
- How do you track your cash flow?
- What does it tell you about the viability of your business?
Profit & loss – The profit and loss statement is a simplified view of a company’s revenue and expenses for a specific accounting period (month, quarter, or year). You can use your P&L statement to make smart adjustments to your business operations.
Gross vs. net – Many times you’ll hear someone reference their income or profit and the numbers sound almost too good to be true. Don’t be misled by folks bragging about their income. Ask to clarify whether the quantities are gross (profit before expenses have been subtracted) or net (profit with expenses subtracted). It’s equally important to understand what you’re grossing versus netting in your own business. Only then can you be sure that your business is in good health.
Once you have a handle on those fundamentals, you can put the numbers into action, determining how you want to grow your business in the year ahead.
A Plan for Stability – And Eventually Growth
If you want to be able to weather this storm, you need to challenge yourself with these financial questions.
- Where is my business now in terms of income? (This is your current state.)
- Where would I like income to be (gross and net)? (This is your desired state.)
- What are my strengths and weaknesses in terms of my business finances?
- What are my short and long term goals to stay afloat?
- How can I continue to generate cash flow?
- How am I nurturing current clients to keep them?
- How many new leads do I need each month, week, and day?
- How can I adapt to keep generating new leads?
- What resources are needed to meet my goals?
- How much debt do I have? What’s my plan to repay it?
- Are there cost-cutting measures I can take now?
- What will help me meet these goals? Who will hold me accountable?
Use these questions to begin to plan for possible outcomes. It might seem daunting at moments, but financial planning can mean the difference between weathering this storm and coming out thriving on the other side versus shuttering your business.
If you want a guiding hand for figuring out your finances so you can prepare for the worst even as you hope for the best, contact me today.
Celeste Giordano’s mission is to help business owners develop the skills, knowledge and attitude necessary to “DoublePlusTM” their income and become effective and inspirational leaders in their fields. Whether it’s taking your successful business to the next level or starting a new venture, she will teach you the exact skills and strategies you need to enroll more quality prospects, build a rock-solid team, and break through obstacles to achieve real profit and lasting success. Celeste is a professional business growth specialist, a master sales strategist, and dynamic speaker with 40 years experience in direct sales and managing high-performing teams.
To learn more about Celeste, click here.
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At Celeste Giordano Coaching, I work with each client to implement the strategies they’ve been missing that will enable them to break through barriers preventing them from the success they know they are capable of. Contact me today to find your future clients who just don’t know what they’re missing.