Are you a victim of the common financial mistakes that kill small businesses in Africa? You’re about to find out. I’m sure you would have heard the notorious statistic that nearly 80 percent of small businesses that start today may die within the first 18 months. This is both a sad reality and a mindblowing […]
Put simply, maintaining a good short- and long -range financial plan enables you to control your cash flow instead of having it control you. The most effective financial budget includes both a short-range, month-to-month plan for at least one calendar year and a long-range, quarter-to-quarter plan for financial statement reporting.
The gross profit on a product is computed as: Sales – Cost of Goods Sold = Gross Profit To understand gross profit, it is important to know the distinction between variable and fixed costs. Variable costs are those things that change based on the amount of product being made and are incurred as a direct […]
An expense budget is part of the bread-and-butter basics of good management. Set your budget as a goal, then review and revise often to stay on track. Being right on a budget is usually good, but good management takes the regular review to check on the timing, efficiency, and results of what your business spends.
First, allow me to deal with a very common problem: Business owners are often afraid to forecast sales. But, you shouldn’t be. Don’t think there is some magic right answer that you don’t know. Don’t think that it’s a matter of training you don’t have. It doesn’t take spreadsheet modeling (much less econometric modeling) to […]
The standard entrepreneur’s story reads as follows: You talk with your friends and family about your business idea for months. You then convince a colleague or two to join forces with you. You start creating some deliverables, set up a small office, and perhaps you even make some initial sales. But it soon becomes clear […]
If you’re in the process of starting a business or writing a business plan document, you’ll have heard the phrase “balance sheet” mentioned, or maybe you’ve seen one in a sample business plan. The balance sheet is one of three essential parts that form the bedrock of a company’s financial statements: cash flow, balance sheet, […]
Most simply, cash flow statements very quickly tell the story of how much revenue a company has coming in (inflows), and how much it has going out (outflows). That information can be leveraged to gauge an organization’s liquidity and to predict where a company will stand financially in the near future.
An Income Statement, also called a Profit and Loss Statement, is a fundamental tool for understanding how the revenue and expenses of a business stack up. Simply put, it tells anyone at-a-glance if your business is profitable or not. Typically, an Income Statement is a list of revenue and expenses, with the company’s net profit […]
One of the secrets to business success is knowing how to set the best price for your product or service. If you set your price too high, you may scare away customers and favor your competition. If your price is too low, you may be losing profits and running your business at a loss.