Sabrina Parsons, CEO of LivePlan, believes “budgeting, forecasting and planning are not just for startups. If you do this on an ongoing business, you’re going to grow 30 percent faster, you’re going to be more successful and your numbers are going to mean more.”
When we start a business, we don’t just think about the numbers. Instead, how we can define success is how we involve them in our day-to-day decision making. It very important thing on how to manage your financial.
- Profit doesn’t define success
Profit isn’t the best indication of how our business is actually doing. If business growing so fast, we’ll find our cash stash is being depleted more quickly than expected. Profit might be low, but it can grow up very well. This to make sure that our business headed down the right path.
- Know What Metrics Matter For Our Business
There are two incredibly important metrics which mean customer lifetime value (LTV) and customer acquisition costs (CAC). LTV helps you understand what your customers are worth to you, and CAC helps you understand how much it costs you to acquire them.
So, we need to take a close look at our business model and reach out to industry peers to help define these specialized points.
- Do Not Lose Money On Dumb Mistakes
It becomes easy to make mistakes that end up costing us. Money we get today is worth more than money we get in four months. For example, if our customer are paying late then we always give the extend time to them without implement a late fee or charge interest on the amount owed.
So, as a result we will lose money that could have been in the bank. Take some time to work through our business processes and identify places we could be unknowingly losing money. If we are unsure, reach out to our accountant or bookkeeper for help.
- Perform An Expense Audit
Perform an expense audit is important because when our business expands, overspending can become a problem, as we don’t have time to monitor every money that leaves our business. We need to take a close look at where we are spending money.
Are we not overspending? How else can we cut costs? We need to ask ourselves these questions could help us save thousands annually.
- Value Your Time
The most valuable resource is often our time. Entrepreneurs should constantly think about whether they’re spending time on the most important parts of their business. Time is most important to make sure our business headed down the right path.
Example, if our business is spending three hours a week running payroll manually, we may think we’re saving money, but we are actually expending time and energy that could be put toward growing our business.
- Create A System To Track Your Success Over Time
This system will tracks our financial progress over time and motivates to set our goals. Our system has to include what we want to do, what we actually did, how that compares with the previous period, and how that compares with the same period last year for seasonality.
System not only helps validate any future financial decisions, but it pushes us to improve our financial health each year.
Well,we all know it definitely matters to be financially stable nonetheless, to understand our financial is so complicated and seems like not important….well we all know it is important.
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