The precise origin of the name “Black Friday” for the day after Thanksgiving is unclear, but the modern meaning of the holiday for retail and small businesses couldn’t be more obvious: an opportunity to generate revenue and profit during one of the best shopping periods of the year.
The National Retail Federation estimates that Black Friday will remain one of the busiest retail days of 2017 with 115 million Americans pulling out their wallets. With that many potential customers in the market, it is no wonder that so many new businesses focus on ways to reach their target customers and push their financials “into the black.”
For many other new and small businesses, where the owners are less than comfortable with “the numbers” and financial management, they’ll have no idea how they did on Black Friday until they talk to their accountant (if they ever do).
Unfortunately, financial information is the elephant in the room for many—even those who have been running their businesses for some time.
As an entrepreneur, it is critical that you understand the financial dynamics of your new business. You can and should get advice from qualified professionals, but in the end, the decisions are yours to make.
As the leader of your business, this puts you firmly in the driver’s seat, allowing you the opportunity to grow your business and know when your business is profitable.
Consider the following five strategies to increase profit for your business:
BECOME NUMBER SAVVY
Understanding key financial concepts and financial statements affects your ability to successfully run a business. If you feel unsure of your capabilities, take a class, read a book or conduct research on the internet. There are numerous free resources available to you, including the practical content within FastTrac that explains the “Financial Management Cycle” in plain English. Take advantage of these resources. Consider it an investment in building and growing your business.
SET CLEAR FINANCIAL GOALS
Your business must generate profits in order to cover your overall financial goals. Running a business that merely pays you a salary is not a sound business practice. Your business must be profitable enough to cover its own expenses, pay you a salary and allow you to reinvest in the business. The new Kauffman FastTrac course has modules focused on projecting costs and projecting sales, the two key elements of setting goals relative to your business’s performance.
REMEMBER THAT CASH IS KING
Without cash, it is impossible to cover the expenses incurred when running a business. Many businesses close within a few years of opening, and poor cash management is often the culprit. Sometimes this takes the form of not having enough cash on hand, poor inventory management, over-investment in fixed assets, poor credit arrangements or a general lack of planning. Kauffman FastTrac devotes an entire module to cash flow management. It’s that important.
CLOSELY MONITOR YOUR BUSINESS FOR WAYS TO INCREASE PROFITABILITY
You might have heard the phrase “If you’re not moving forward, you’re moving backward.” That definitely applies to small businesses. To keep up with growing costs, you must find ways to stay (or become even more) profitable. That might mean increasing your customer base, selling more product, adjusting your pricing structure or finding ways to control expenses. Inside the FastTrac course, there are six topics packed with ways to measure and optimize your financial performance.
DEVELOP A BUDGET
Having a budget can help you evaluate your operational efficiency, monitor the financial health of your business and build a company that will help you reach your financial goals. Every decision you make throughout the business development process—every change, every goal—affects your financial outcomes. Budgeting is a reflection of the goals and strategies you have for your business. Kauffman FastTrac gives registered users a simplified financial model in each user’s Workspace that will result in an income statement and provide the information necessary to understand profitability, cash flow, and your funding needs.
As you move through your entrepreneurial journey, you will need financial savvy to make daily financial decisions that affect the profitability of your business. Your ability to evaluate financial concepts and make decisions will be a key success factor in keeping your business “in the black.”
If you still have questions about how to improve your financial savvy, register for FastTrac. With open online access to practical tools, FastTrac has great resources that can help you with your businesses finances and beyond.
Article adapted from the original available at Thinking Bigger Business Inc.