We have all been told, "Keep your eyes on the road." Whether it came from our driver's education teacher or a nervous passenger, paying attention to where you are going has always been sound advice. When it comes to your business’ finances, not keeping an eye on the financial road can be just as dangerous as not paying attention on an actual highway. Benay helps clients understand and create the financial dashboard they need to keep their businesses safely on the road to growth and success.
Whether you are driving a Ferrari or a Camry, you are a single proprietor or a mid-sized company, you have to have a financial dashboard. All companies need the right controls to keep the corporate vehicle on the road and out of a financial ditch.
- The speedometer tells you how fast you're going. What’s your business speedometer? Your income and expense statement, also known as a profit & loss statement. The P&L tells you how much money you’re making (income), how much it costs you to make that money (cost of goods sold or cost of sales), and how much of it you are spending (expenses). If you’re making money it’s profit; if you’re losing money, it’s a loss – hence the term profit & loss!
- The car’s fuel gauge can make the difference between getting to where you want to go and running out of gas. What’s your business’s fuel gauge? Your balance sheet. It is a snapshot of your business’s financial condition at a specific time, and tells you the value of your business, how much it has (assets), and how much it owes (liabilities). Assets always have to equal liabilities plus equity. A great example of this is if you own a building worth $200,000 (asset) and owe $150,000 (liability), then you have equity of $50,000. This gauge is a good way to see how far you’ve come and decide what routes to take ahead.
- If you drive a stick, you're probably familiar with your car’s tachometer, which measures revolutions per minute (RPM) in the engine. Your business tachometer is your cash flow statement and shows exactly how much cash is flowing in and out of your business. This information can help you shift gears at a time when you'll get maximum economy by investing in new projects, personnel or equipment, or by slowing down spending until you have more in your figurative gas tank, cash in the bank.
There are many other business gauges, terms, and tips for safe driving on today’s financial terrain. Benay’s expertise and experience can help you navigate your road ahead. We’d like to be your driving partner, helping you foresee the dangers and possibilities that lie on the road to growth and success.