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Why do so many companies fail to make a profit or meet their financial goals? The answer is simple because many business owners simply ignore one or more of the 5 keys to financial success. Many businesses are making sales but are not profitable. Learn how to strengthen your business model and set up your company for success. Developing a financial business model provides a clear picture of your company’s financial history as well as your company’s financial future. Working from a financial business model will help prepare your business to make better business decisions in the future. And regular analysis of your finances will provide you with the financial success you seek to achieve. Get ready to gain more flexibility and financial freedom in your company with the keys to success.
Key #1) Don’t do it alone
Poor financial management is not reserved for start-ups, but for all businesses. Many business owners can produce and sell their products and services, but cannot manage their finances. If you can’t determine where you’ve been, you won’t know where you’re going. Accountants and bookkeepers can help your business establish a financial foundation and make predictions about its financial future.
Key #2) Review historical data
Building a financial history of your company’s finances gives you valuable lessons for today that will guide you toward a more profitable future. Reviewing financial history helps you know what to do and what not to do in your business. Compiling historical financial data can help your bookkeeper or accountant assess the reasons for your success or failure.
Key #3) Project Sales and Costs
Once you have completed the second key, it will put you on the path so you can project sales and costs. Projecting sales and costs without historical data can be challenging but not impossible. Forecasting for your company is not a process that begins in the start-up phase, it is an ongoing process to help determine areas of growth and change. Costs are always easier to project than sales. However, sales should not be your main focus, but making the business profitable!
Key #4) Develop Financial Statements
Financial statements are the framework of the accounting cycle. In other words, the income statement, balance sheet, and statement of cash flows provide a picture of how well your business is doing financially. Financial statements structure all financial data in a way that is easy to understand and must be prepared accurately. These statements help you assess financial performance and determine key business decisions.
Key #5) Evaluate and implement changes
This is the final piece in the financial business model. Once the first four keys have been established, you will be able to assess the financial position of your company and implement changes where necessary to ensure growth and financial success. Putting it all together, the financial statements will reflect the historical information of your company and decisions about the future can be made from that data.
The financial business model provides clear information to help you make sound financial decisions that can promote long-term success. Applying these five keys to your business will put your company on the path to achieving its goals and making a profit!