Secure the Financial Health of Your Company by Following These Vital Tips
Entrepreneur's New Year’s Guide
Businesses that move forward and survive during difficult times are the ones that are able to manage through the pain. You can choose fear or opportunity. If you choose the latter, you must begin by ensuring your business has the proper foundation for success, which will influence the future financial health of your company.
This article is about ensuring a strong financial structure for your business during emergencies, but I have more to share. I encourage anyone reading this to give my e-book a chance, The Emergency Business Response. Download it at www.cardoneventures.com/emergency. If you’re not convinced, start by following me on Instagram @brandonmdawson to learn more about me.
Your foundation for success is composed of the following, from bottom to top:
Your people are your business. Having an exceptional accounting team is the basis for stable financial health. Setting your business up for success directly correlates with the quality of this team. Compromising in this area for speed or convenience will only hurt your company in the long run and crush you in a crisis. Ensure that your finance team is experienced and equipped to handle a business emergency.
A strategic plan establishes clear goals, identifies key stakeholders, and prioritizes the expectations required to reach the goals. Strategic planning allows a company to move forward based on facts and data, unify a vision and purpose across all managers and departments, and build a comprehensive road map for the short- and long-term goals of the business. It includes strengths, weaknesses, opportunities, and threats (SWOT) analyses, long-term goals, yearly objectives, and action plans. If these items are not currently in place, they should be added to your to-do list going forward.
Budget preparation and use should align with strategic planning objectives. Finding the right mentor or advisor is critical. The old adage “garbage in, garbage out” is true when it comes to establishing and maintaining the financial and strategic planning of your business. When you least expect it, this planning may make or break you in good times and bad.
Company owners, department heads, and key decision makers within a company are critical in allocating where the money needs to go in a crisis in order to achieve the financial goals of the company. Staying attentive to the budget and the allocation among departments is crucial during times of stress. Difficult budget decisions must be weighed heavily in favor of the company’s longevity as opposed to temporary relief.
Development and Monitoring of Key Performance Indicators (KPIs)
Analyzing your company's financial health and goals requires KPIs that provide a clear picture of the company’s current, as well as its future, status.
It’s even more important to monitor your goals during emergencies. If you want to reach a goal, you must measure activity in order to track your progress toward it. For example, the KPIs for a manufacturing business include backlog, on-time delivery, days’ supply in inventory, and average sales price. Of course, there are many other KPIs, but the important point is to align relative KPIs to the goals of the strategic plan.
Timely and Accurate Monthly Financial Reporting
Accurate, effective, and timely reporting is the oil that keeps the business engine running smoothly during emergencies. Monthly reporting is the cherry on top. Incorporated in those reports are the balance sheet, cash flow statement, income statement, sales data, cost of sales data, operating expenses, and relevant KPIs.
There is an additional bonus. Accurate monthly reporting should prevent any legal complications when applying for government assistance during an emergency. Filing for government relief always requires up-to-date documentation.
Apart from the financials, there is a lot more that goes into succeeding in business during a crisis. That’s why I wholeheartedly recommend the $47 Crushing COVID Mentor Group program for anyone who is interested in bringing their business out from the shadows and into better times. For details about the program and reviews from real business owners, visit www.cardoneventures.com/mentor.
To learn more about how Cardone Ventures can help your business, visit www.cardoneventures.com.
Follow Brandon Dawson on Instagram @brandonmdawson.