Do You Have a Financially Intelligent Business?

January 7, 20190 Comments

Efficio Financially Intelligent Small BusinessThe health of your financials is a reflection of you and the business you perform.

You can’t Mobilize Your Money without the proper tools and guidance, just like you can’t operate a business without the proper tools and support.

The following questions will give you a head start on what a financially intelligent business should know. Answer them honestly:

  1. Are you currently using an accounting software program to track your business finances? If so, which one and how proficient are you at using it? How consistent are you?
  2. If not, how are you currently tracking the finances for your business? Is this system working? Why or why not?
  3. What is your company’s balance sheet used for?
  4. What is your company’s income statement used for?
  5. What is your company’s cash flow statement used for?
  6. What profit margins have you set for your current solutions? How did you determine these margins?
  7. What steps do you take to process payments and invoices?

These are basic accounting questions.  There are another set of questions that relate to the most important element of any business…Finance!

  1. Do you know the difference between profitability ratios and efficiency ratios?
  2. What items determine how much money you have in the bank other than cash?
  3. How does profit provide opportunities within your business?
  4. How is your company’s profitability measured?
  5. What does the “return on assets ratio” tell you?
  6. What does the “return on equity ratio” tell you?
  7. What does the “debt to equity ratio” tell you?
  8. How do you currently measure capital expenditures?
  9. What does “managing your balance sheet” mean?

These are basic finance questions.  And this is just the beginning!

There are many things to learn when it comes to your financials.  If these questions seem overwhelming, you’ve got a lot of work to do.  It may be time to dedicate focused time not only on organizing your financials but actually learning how to make decision based on the numbers you see; for you and your executive team.

A financially healthy business can mobilize their money and allocate to income, cash reserves and investments back into the business.

We tackle financials (accounting and finance) in detail in our Entrepreneur Education programs.  There’s also a great book we would recommend called Financial Intelligence for Entrepreneurs.  It’s a great primer to a financially intelligent business.

Your Transmogrifyer,

Sherese Duncan

© Effició, Inc.

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