Business Health Check - #2 Cashflow & Financial

Today's Next LVL Business Tip is part two of our Business Health Check series. And it's all about cashflow and financial. So if you heard those terms and you shrieked a little bit, or you thought I don't do numbers or I outsource that to my accountant.

Then this tip is for you because it doesn't matter what level you are in business or how big your business is. 

 It's really important that you know, what your numbers are doing and what your numbers are telling you.


So when you're doing a health check on your business, there are some financial metrics that you cannot put the microscope up to.

  1. Cashflow - First thing that you should look at though, is your cashflow forecast. First and foremost, do you have one? And secondly, what is it telling you? Do you have enough capital to, you know, hire more staff or grow your business in the way that you want to? If not, you may have to go back to the drawing board of your strategy.
  2. Gross Profit & Gross Profit Margin - The second thing that we generally look at is gross profit and your profit margin. Are you making enough money to make your venture profitable?
  3. EBIT & EBITDA - Now you've heard the terms, EBIT and EBITDA before. And there's a very good reason because they are the great indicator of how healthy your cashflow situation is. So have a look and get your numbers, Google the formula and see what your EBIT and EBITDA measures are telling you.
  4. Break Even Analysis - The next thing really important, particularly if you're in the startup phase of business and that is your break even analysis, have you made more money than you've invested into your company yet?
  5. Current Ratio & Debt to Asset Ratio - So you would have heard the current ratio and also your debt to assets ratio. And these are really great indicators of if you've got too much debt against, against your assets and how you might even the playing field in the year ahead. Of course there's also your day's receivables and your days payable. Again, very important metrics to understand if you're getting paid for your services in a timely manner. And also, do you have the funds to be able to pay your debt as well? A
  6. Return On Investment (ROI) - This is by far my most favorite financial metric, and that is return on investment. So similar, to breakeven, you go over the break even point, are you making money in your business? Are you getting a return for every dollar that you put in now? Very important to know where you're at. It will definitely help you from getting any sort of financial surprises and not becoming one of those small business statistics.

If you are a small business in that phase, if you want to have a successful businessdo a health check on your financials, have a cashflow, have a budget and have a [00:03:00] great discussion with your accountant and your bookkeeper. When you see them next. I'll see you next time.


If you're ready to tackle 2021 (or Q1/Q2 of Financial Year 2022) with gusto then book a Strategic Planning session with the team at LVL UP Consulting today. 

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