Archive for August, 2016

How do you know if you are successful if you do not understand your numbers?

August 25, 2016

Many entrepreneurs run their business on a cash basis; however, just because you have cash in the bank doesn’t necessarily mean you are successful – what about bills that you have not yet paid, or even received yet? Many entrepreneurs are soo busy they fall behind in billing their clients. If they haven’t billed you, you can’t pay them, but you are obligated to. (Also, if you haven’t billed them they can’t pay you, but still owe you)

Some run on an accrual basis and have great sales (you keep up on your billing) but are growing a large amount of receivables (your clients are not paying you timely enough) you may not have the cash needed to pay your bills even though you are “successful”. In order to keep your vendors happy you have to borrow money incurring additional expenses.

Knowing what is behind the numbers… what they actually mean… is critical in making sound business decisions.

Where are your weaknesses in the business, where are your strengths. Focus on your strengths and get help on the weaknesses. It is not a failure to get professional help from someone who knows the subject better than you do. (I assume you take your car to a specialist to keep it in top shape, why wouldn’t you do the same for your business!)

Advertisements