“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” This is a famous quote by Robert Kiyosaki, author of Rich Dad, Poor Dad. It rings true to business as with life and is the reason you need to check those daily decisions you make which impact your bottom line. While you cannot completely determine how healthy or sustainable your business is, the following is a checklist you can use to evaluate your financial health as a small-business owner.
These are the sales or the amount of money your business earns before any expenses are taken out. Profits come from revenues that are higher than expenses. Every business needs revenue goals. If you fall short, you need to figure out what happened and how to avoid it. If you surpass the sales target, you need to know what you did right so you can replicate it.
Have a budget. Budgets help businesses predict the amount they’ll earn and ensure they have the financial means to cover fixed and variable expenses. If your accounting software offers budgeting tools, use them.
Accounts receivable is the money that your business has a right to receive because it has provided customers with goods and services. Now monitoring receivables and following up on past due invoices can be a pain but making sure customers pay their bills is a surefire way to minimise losses. Have a clear policy…