Last updated 6 months ago
If you own a business, you know how much hard work and dedication it requires. Sometimes your energy is so focused on day-to-day operations that you forget to step back, look at the big picture and gain valuable perspective.
How can you tell if your business is performing well? By using numbers from your company’s fnancial statements, you can calculate ratios and formulas that grade the performance of your business. Having a report card reveals the strengths and weaknesses of your company – and provides an opportunity for solid improvement.
According to MasterCard's "Small Business Report Card" guide, the basic elements that need to be contained within a report card addresses the efficiency of the operating cycle of the business. The parts of the operating cycle are: "Assets," "Liquidity," "Debt" and "Profit."
To assist you in understanding the basic components of a business report card, here are some definitions:
- Assets - Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset). Two major asset classes are tangible assets and intangible assets.
- Liquidity - The ability of a company to meet its near-term obligations as they come due. There are several measures, but the most common is the current ratio, which is calculated by dividing the total current assets by the total current liabilities.
- Debt - The amount owed by the company to a second party. Debt is often examined to determine how much a company is leveraged or calculating the debt to worth ratio (total liabilities divided by total capital). This ratio is often used in determining a company’s purchasing power.
- Gross Profit - The difference between revenue and the cost of making a product or providing a service, before deducting overhead, payroll, taxation and interest.
- Net profit is a measure of the profitability of a venture after accounting for all costs. It is equal to the gross profit minus overhead minus interest payable for a given time-period.
Measuring your business by the numbers doesn’t have to be hard, you just need to know what to focus on for your business and understand some basic accounting principles.
ActionCOACH Spokane understands the importance of managing a business and making decisions using actual “hard” data. If you want to learn more, check out the upcoming NumberRICH event that will provide you with the tools and ideas to help you create your own business report card to manage your business.
If you want one of our Spokane business coaches to do a review of your numbers and provide you with some feedback, then give us a call at (888) 789-6280 to schedule a Free Coaching Session.
Last updated 7 months ago
In the past couple of months, The Spokesman-Review has reported that both the Spokane area and the US in general are showing signs of an economic recovery.
To learn more, check out the following articles:
Spokane’s economy showing signs of recovery, Moody’s finds
Unemployment rates fall in half of states
How is your business positioned for a recovery? Do you have a plan in place to take advantage of the pending upswing?
Last updated 7 months ago
Perhaps the most important part of any new business is the formulation of a business plan. A business plan not only gives your company shape and direction, but also helps you secure additional funding that is critical to getting started. Building a business plan is incredibly important, but many business owners forget the next step: following the plan.
- Why You Need a Business Plan
Your business plan is a very important document. It sets the direction, tone, and goals for the company, and is usually one of the first things potential investors ask to see. Your business plan also helps your employees get—and stay—on the same page, ultimately fostering your company’s growth and expansion.
- Why You Need to Stick to the Plan
Generally speaking, sticking to your business plan is very important. Your business plan was, hopefully, painstakingly crafted to provide structure and direction for your company. As your company begins to grow, there are many paths that may be tempting, but you don’t want to spread yourself too thin: Stick to the points outlined in the business plan and accomplish what you originally set out to do.
- When to Deviate From the Plan
One common reason that companies bring in experts for business consulting is to reexamine their business plans. This should be done fairly regularly—perhaps annually—to ensure that your business is still where it needs to be. These business consulting reviews help to hold you accountable to your plan and can also help move the company in a new direction if necessary.
Your business plan is one of the most valuable documents you’ll write as a business owner, so it is important to not only get it written right, but also follow the plan.
For more information, or to schedule a business consulting appointment, give us a call at (888) 789-6280. ActionCOACH is a leading business and executive coaching firm, serving the Washington and Idaho communities, helping businesses large and small unlock their full potential.
Last updated 8 months ago
Looking for more information about the topics addressed in our recent blog posts? Read through the following for more details on growing your business and how our workshops can help you accomplish your profit maximizing goals. If you still have questions, then feel free to call the ActionCOACH experts at (888) 789-6280!
- Get tips on how to delegate responsibility while focusing your efforts on more important business matters in this Inc. Magazine article.
- For more information on the benefits of hiring a business coach, read through this Leader’s Beacon post.
- Learn more about the phrase, “bottom line” and the business topics that relate to it by checking out this Investopedia.com entry.
- Do you want to know what a 90-day business plan looks like and how it can benefit you? If so, then take a look at this eHow.com Money post.
- For more information on starting your own business and helping it grow into a viable and profitable venture, visit BusinessLink.gov.
