Operating leverage measures a company’s fixed costs as a percentage of its total costs (fixed and variable). It is used to evaluate the break-even point of a business as well as the likely profit levels on individual sales. If a large proportion of a company’s costs are fixed, it is considered to have high operating…
Trying to get a line of credit? Frustrated with the bank process? You’re not alone. Navigating the banking landscape can be a very time consuming process. There are two questions you need to answer before you start: Are you bank ready? Are you bankable? What is bank ready? Bank ready is nothing more than being…
KPI’s, key performance indicators are critical for managing your business. You can’t manage what you don’t measure, right? Goals allow us to stay focused and manage our businesses effectively. Here are 4 KPI’s for you consider: Liquidity– You may be profitable, but how much cash do you have in your bank account? Measure your cash…
It’s that time of year again when we begin to close the books on the year and look ahead to what the new year might bring. The assumptions you use are critical to your profit and loss and balance sheet forecasts. This is especially true if you will use these projections to attempt to obtain…
How much money are you going to make this year? Since 75% of the year is over, October and November are good months to get with your CPA and discuss tax strategies. While it’s a good idea to minimize taxes, many of you could have cash flow or leverage covenants on the credit commitments with…
Why is funding losses in your business with debt a bad idea? First, there are always two options when funding your business, one is with debt and the other is with equity. But many business owners would prefer to take the money out of their line of credit than take it out of their own…
Where’s the cash? Several years back, I had a client ask me if I’ve made $500,000 in profit why isn’t it in the bank account? A very good question I’m sure many of us have wondered. While profits are great, they don’t cover payroll, other operating expenses, bank loan payments and owner’s distributions. Cash does….
Trying to get a line of credit? Frustrated with the bank process? You’re not alone. Navigating the banking landscape can be a very time consuming process. There are two questions you need to answer before you start. Are you bank ready? Are you bankable? What is bank ready? Bank ready is nothing more than being…
One of my mentors told me a long time ago, “the path of least resistance is what makes men and rivers crooked.” This is true when it pertains to getting a line of credit for your business. Sometimes our path of least resistance is obtaining a line of credit from a bank. Other times, there…
I had the privilege of speaking with a group of investments managers last week. One of the points I emphasized was that most business owners are terribly undiversified and the largest asset they own is the investment in their closely held business. To make the diversification worse, the business is also the sole source of their…
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