A Short Guide To Business Financial Management

How Can Proper Business Financial Management Benefit You?

Knowing the basics of financial planning is as crucial as learning the language of a country you’re visiting. Knowing a few terms may be fine for a while, but you have to make an effort to know the culture if you’re going to live there for a longer period. The same goes for financial planning: aside from knowing what you need to sell, you should be able to plan out the whole process to be financially successful. Here at Edge Small Business Consulting, we provide thorough and clear plans to help your business reach its financial goals. Struggling with your business? Don’t give up just yet. Contact our business financial planners to see how we can help!

The 6 Steps of Financial Planning

Basic Accounting

The first thing we have to know is the current status of your business. This means having all the financial information needed to know if your business is making enough profit or if it’s declining. A good planner should be able to see red flags and use that information to create new methods to prevent doing the same mistakes.

Aside from checking financial statements, we may also look at special-purpose reports including whether to update existing machines, whether to offer or outsource products and services, etc. Knowing what costs and factors are relevant in making a decision is the difference between a good and a bad decision.

Identifying Profit Centres

After a business financial analyst examines and interprets your business records, the next step is to understand where you generate the most money. Since businesses need profit to keep going and growing, we help decide whether you should continue, decrease, or stop with a revenue stream.

But aside from sales, you can also generate profit by increasing efficiency in production, looking for new markets, and finding different ways to sell. We look at all these areas and see if they’re feasible sources of income for your business.

Managing Cash Flow

Failing to understand cash flow is like leaving your business open to problems. Annual reports don’t tell you when exactly cash comes in and out, and this can cause problems when paying bills or other important expenses.

This is why knowing how to use your budget properly is key to your success. As business financial experts, we expect problems to happen so we try to have as many reserves ready. Having a diverse portfolio lets the demands of newer accounts offset other more regular sources of income.

Leveraging Assets

Assets can act as leverage in two different ways. First, you can use them to secure loans by using them as collateral. Second, if they weren’t acquired by getting a loan, assets can increase the equity of your business. This means additional financing may be raised against that equity if your business is properly structured.

We know how important leveraging your business options is. Most business owners compromise too much on their assets for capital. As business financial advisers, we don’t want you to learn things the hard way, to the point where you need to hand over ownership.

Taxation

Your business won’t survive long without proper tax management. The government can be very unforgiving the moment it finds out that a business paid insufficient taxes or skipped paying their taxes completely. Tax rules don’t leave much room for errors, and a simple mistake can make your business lose money and eventually, go bankrupt.

We know how taxes work and can help you avoid this by keeping an organized list of financial transactions. And as your business financial advisers, we’ll also advise on what your business should do to make sure it always abides by the law.

Future Business Structure

The majority of small businesses start by having one or two owners. But as a business grows, you’ll probably want to restructure so it becomes its own entity and not just your personal source of extra income.

Our team at Edge Small Business Consulting can help you decide what the best next step is for your business. Whether it’s just turning a sole proprietorship into a partnership or becoming a full-blown corporation, we can help you navigate through possible obstacles and even tell you what legal steps you shouldn’t avoid to stay out of trouble.