Our A – Z isn’t a lending lexicography but an example of our experience of the building block considerations within the mechanics of small business financial positioning. We’ve only considered one element for each letter and we’d really like to know if you’d place a different consideration as a priority, for any letter, in your business.
A … is for Accounts
- The importance and necessity of keeping financial account of a business can’t be overstated, whether monitoring budgets or assisting in making crucial decisions. To monitor business performance there are three elemental types; Balance Sheet, Profit and Loss and Cash Flow Statement.
B … is for Bad Debt
- A cash flow hindrance for any business with an explosive potential of hindering supplier relationships.
C … is for Cashflow
- Positive cash flow is obviously better than negative cash flow because even businesses with assets in excess of any liabilities need to meet their obligations.
D … is for Default
- Getting into default with any fiscal obligation isn’t as difficult or uncommon as you might think, even with a good credit score. The importance of affordability and credit risk is factored into debtor considerations and usually with no stone left unturned.
E … is for Earnings
- Variant upon how a business functions, business earnings aren’t the same as personal earnings. Used in business valuation therefore a major consideration both for start ups or established business.
F … is for Finance
- We couldn’t miss this one out, it`s elemental and will have an association with most aspects of any business. Reflecting its status; a financial position is the general condition of a business.
G … is for Gross
- Usually applied to a fiscal element before any exclusions, i.e. turnover, income, profit, sales, etc. to which crossovers shouldn’t be confused. A gross profit isn’t a gross income and a gross turnover isn’t a gross profit.
H … is for Help
- Having a business is like childbirth, no one tells you how painful it is. We’re constantly musing about the never ending business owners’ responsibilities and the importance in business of not hedgehog curling.
I … is for Impaired Credit
- Little or no history credit history can be as damaging as a bad history, however, the ability to explain any relevant negative history can assist. Lenders, in part, adjust their terms according to credit history.
J … is for Joint
- Whether its risk, work or costs that are being spread there will be implications which will have a financial ratio applied therefore good planning is essential for the pros and cons of partnering.
K … is for Key
- The key to success is knowledge. Know your goals, know your market but absolutely know your plan and be prepared to change it.
L … is for Liquidity
- Onomatopoeia obligation for business; acting as avoidance to it becoming distressed or unstable. With financial accounting as the necessary measuring stick, because droughts quickly lead to death, it’s closely linked to profitability.
M … is for Mistakes
- `My Way’ the mantra of many a business who will likely have a deep groove worn in the line `mistakes I’ve made a few’ because, even when its calculated, risk hangs around business like an odour waiting for a blast of air freshener. The importance of factoring in the positives and negatives to business plans allows for some flexibility.
N … is for Negotiable
- Business costs and lending can sometimes be renegotiated dependent upon your financial positioning and your business plan.
O … is for Opportunity
- Opportunities arise continually no matter what type of economic climate we’re experiencing. A business that is prepared and ready becomes their own `dragon’ and takes those opportunities, therefore businesses that are open to ideas are more likely to be open.
P … is for Plan
- Priority for any business is its plan. Without one a start up stays an idea and a running business runs the risk of stagnation, certainly there will be no long term development. The key document for investors and should be the key document for the business.
Q … is for Question
- Without questions made to the business there is no knowledge to plan, strategy or review. Without answers to questions posed by the business and to the business there is no business development. Without business development there is likely no business.
R … is for Review
- Regular review of the business plan will ascertain its fiscal position and give some knowledge for strategy.
S … is for Strategy
- After regular review of the business plan any gaps, concerns or misgivings can be addressed with appropriate strategies, for long term growth and survival, put into the plan.
T … is for Turnover
- Turnover is the important measurement of a business’s working efficiency and evaluating your business is important practice, whether or not you are considering selling.
U … is for Underwrite
- Underwriting is undertaken by a lender or investor in respect of any risk that a prospective debtor may pose for them. Detailed analysis of the business’s credit history will be made to give an indication of the ability of the debtor to service the debt and what terms the lender is willing to offer credit.
V … is for Valuation
- Measuring the value within a business involves a combination of elements associated with various financial statements, current market considerations, assets and liabilities therefore the market value isn’t usually an ‘accounting’ value and requires professional assessment.
W … is for Want
- How much business wants to succeed and has the ability to succeed will depend on many elements.
X … is for X Factor
- Having an edge for your business isn’t too difficult. Take a step back, look long and wide, find your strengths and maximise them. Re-focusing the business potential could maximise potentially untapped growth.
Y … is for Yay
- You’re in business, Yay! ….Now make it pay its way.
Z … is for Zzzz
- …….. So don’t fall asleep at the wheel.
(Image and Article credit: Copyright SUF)