After an incredible experience at Business Mastery I am full of knowledge that I am grateful to be executing on! Of course, I was struck with Strep Throat 2 days after I got home but, haha I believe that is par for the course. Testing, testing, always testing.
I am excited to discuss what Keith Cunningham calls, Business Optics. He explains that what you don’t know, can kill you. Just like a doctor uses tools like an MRI to “look under the hood”, a business owner must do the same with their financials.
Now, the info below may be overwhelming but, if you have any interest in starting to understand your financials, I urge you to trudge through it and ask me questions. Better yet, come to our FREE live (human-to-human) business workshop this Friday, February 7, from 10:30-11:30am. You can sign up using the link below. Space is limited to 20 people.
To start, our goal is to Turn Assets into Profits and Profits into Cash.
Remember this VERY IMPORTANT FACT: Profit is a theory; Cash is a fact.
Most business owners look at only two numbers, revenues, and profits and this is not the whole picture. If we want to succeed in business, we cannot ignore cash.
So how in the world do we do this; turn assets into profits and profits into cash? Without writing a massive post, here are a couple of pointers:
Ideally, the goal is to minimize the amount of assets it takes to make profits and minimize the amount of expenses it takes to make profits. For example, assets can be employees who create income for you, a product that you sell, a software that produces income. How many payroll dollars, employees, products, does it take to make a profit? What are your expenses, are they necessary? Look at these numbers and see what you find. Can you/should you adjust somewhere? Can you reverse engineer them in order to increase your profits?
Once we have profit, we want to maximize cash. To do this, we look to our Balance Sheet and find the 3 areas that affect cash:
AR (Accounts Receivable)
AP (Accounts Payable)
Inventory
Dig into these areas and create a strategy to generate more cash. Ideally, we want our Operating Cash to be greater than the capital expenditures (money spent on acquiring or maintaining assets) of the business.
At this point, this may be a foreign language to you and that is sadly normal. However, I will repeat, what you do not know, can kill you. We are here to help. We want to be the Money Firm who decreases the extremely massive number of businesses that fail within the first 10 years of doing business because, business owners deserve to win. We deserve to gain clarity and find the FUN in MUNey!
Here's the link to sign up for CASH IN, CASH OUT. INHALE, EXHALE. This Friday from 10:30-11:30am
https://www.eventbrite.com/e/89634363795
In Love & Light!
Erin