Starting a business, big or small, is no easy feat especially when reaching to the point of success. Any first-time business owners will face a major challenge which is learning the basics of running a business on the go. Having a small business doesn’t guarantee that you’ll be able to handle the billing, accounting, financing- all of which are critical in a business. As an entrepreneur, your top most priority is creating a dependable revenue stream so that it can diminish the possibility of losing any profit or even avoiding the worst things from happening, is by going bankrupt. It’s very crucial to recognize where you stand when running a business. You might be entrapped with the demand of duties as a business owner that you don’t step back and look at the bigger picture.
Here are key areas to look at when evaluating how your business is doing financially. Staying on top of these guidelines can help you plan and avoid financial problems. 1. Revenue
The amount of money a company collects in exchange for its goods and services is called revenue. A company’s revenue is usually listed on the first line of the income statement as sales, net sales, or revenue, or net revenue. Depending on what industry you’re in, there are proven and tested ways you can upsurge your business revenue.
• Add more customers: Bring more business in the door. More customers = more revenue.
• Increase the no. of transactions: Encourage people to buy from you more often. If your regular customer comes in once a month, give them coupons or discount codes. Make them patronize your business. Make them excited to come at least once a week, it will increase your revenue.
• Upsell : This is when you offer your customer to buy more of your products or services. For example, if you own a fast food chain, suggest a dessert, appetizers, or soft drinks in addition to a regular meal.
• Raise prices : By pricing more you’ll be able collect more revenue from every purchase a customer makes – with the same amount of effort.
2. Expenses stay flat
While expenses will rise as your business grows, they should be in sync. For example, if you experience a revenue growth of 10% year over year, you don’t want your expenses to surpass that percentage. In order to stay on top of expenses and how they relate to revenue, keep record of your business expenses.
3. Cash balance
A low cash balance is an indicator of a business that isn’t doing well financially. Revenue could be increasing but if you just reinvest all the cash back into the company, you’ll find yourself cash poor. For example, if you need additional equipment, staffing, or inventory, you won’t be in a position to shoulder those expenses. Poor cash flow is one of the many reasons for small business failure. Sals Capital can help you in this area.
4. Debt ratio
This formula indicates how much your business owes vs. how much your business is valued and is stated as a decimal or percentage.
A ratio greater than 1 shows that a considerable portion of debt is backed by assets. Therefore, the company has more liabilities than assets. A high ratio also shows that a company may be putting itself in jeopardy because of the rise of its interest loans. A ratio below 1 indicates that a bigger percentage of a company's assets is funded by equity.
Taking all these into consideration, if you’re looking for start-up capital, the next step is easy; Better Call Sal at (332-334-1077) and ask him about our special 0% interest lines of credit.