Look after the $’s
Financial planning is simply the business term for “looking after your dollars”. The important aspect of running a business is to understand the financial implications of your decisions ensuring you are optimising your investment, managing your cash flow and making money!
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1 The Big 3 - Financial Basics
The big 3 financial reports are the financial foundation of your business. The benefit is simple; to survive you must understand what makes up your financial statements, how they interact and what the figures mean to your investment or equity in the business.
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Markdowns, Discounts and Profits
The use of markdowns/discounts is an important lever in controlling your business. Understanding the effect of markdowns/discounts will deliver;
- Increased gross profits
- Increased stock turn,
- Better cash flow
- More satisfied customers
- Increased gross profits
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The Balance Sheet
The balance sheet is a type of health check of the business. It consists of three parts:
- Assets - Items owned by the business
- Liabilities - Items owed by the business
- Equity - Owners interest in the business
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The Cash Flow Statement
The number 1 killer of small business is running out of cash. Good cash flow management will allow you to:
- Understand the flow of money in the business,
- Understand the role of cash in the business,
- Have the ability to manage your cash ahead of time.
- Stay in business.
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The Profit & Loss Statement (P&L)
The P&L summarises (more than any other report) the trading and how well you are managing your business. It is crucial to understand the detail of each and every P&L component.