by Industrius CFO | Financial Analysis, Financial Health
When you’re starting out on the road toward building your start-up or small business, it’s hard to know where the journey will take you. You can guarantee that there will be a long road ahead, full of ups and downs and twists and turns, but how can you ensure that your final destination is a business that flourishes, rather than one that fails? The failure and success rates of start-ups and small businesses aren’t encouraging. According to the Small Business Association, only about 20% of small businesses won’t survive their first year, but the numbers dramatically increase year-over-year—contradicting the popular idea that most start-ups and small businesses fail within their first year of operations. In fact, many businesses fail during their highest years of growth. Only about half of start-ups and small businesses survive beyond five years, and only about one in three remain at 10 years. To avoid failure and to flourish in an ever-changing and often unforgiving market and economy, you need a co-navigator; a partner to help guide you through the essential planning that can help your start-up survive and thrive, and help you avoid the pitfalls that can take down small businesses before they have a real chance. When you have a love for your business, you’ll know everything about what you do, what you offer, and why. But in order to survive, and thrive, you also need to be an expert on everything else about your business; your financials, your competitors, your industry, and how it all applies to your growth and success. If you haven’t been in business very long, or at all,...
by Industrius CFO | Financial Analysis, Financial Health
Starting up and staying in business is not without risk. But with the right understanding of industry metrics, combined with the application of accurate and intuitive financial and business data and analysis, the risks you face can lead to rewards—and the business risks themselves can even be rewarding in their own right. Business risks are inevitable, and they appear in all internal and external forms. The risk variables you may encounter depend entirely on the specifics of your business and industry. Varying levels of risk are within some scope of your control, such as operational or legal risk. But other factors, such as an ever-changing economy, competitors, new products and services being introduced to the market, demand fluctuations, market regulations, and national and international trends, have a bearing on your business and are completely out of your hands. When you combine those factors with effectively managing your business’s financial risk—financial transactions, loans, liquidity, assets, and accounts receivables—balancing it all is a difficult task. That’s why 25% of businesses fail within their first year, and the failure rates continue to increase year over year. Effective risk management is critical to assessing your current business standing and positioning your business for short- and long-term success. It is easy to fall into the trap of feeling secure in running your numbers, looking over a spreadsheet, and then simply assessing from there whether your financials look good or bad. But that is not enough. This approach will set you up for failure, not success, because you’re not looking at the full picture—you’re only focusing on today, not effectively forecasting for tomorrow. It’s not...
by Amanda King | Financial Health
A Survival Guide to Your Company’s Financial Health Financial health is the way in which to measure the financial aspect of a company. Measuring a company’s financial health isn’t easy for small businesses or large corporations. But, with our tips, strategies, ratios and ways to check up on your financial health, you’ll have all the tools you need. A recent research report from the Federal Reserve Bank of Chicago, Pepperdine University, and online small business lending company FundWell raises awareness about small business financial health. The report titled, “Small Business Financial Health Analysis” covers policies, investments, and financial and technical assistance resources to help small businesses achieve their goals in computing their financial health. But, these three institutions came together for another important reason. Our U.S. economy depends on small businesses to be financially healthy. There’s no denying that small business growth drives U.S. job creation. From 1993-2009, the U.S. economy added 9.8 million jobs! A financially weak business creates a domino effect – impacting the U.S. economy. To ensure businesses are financially healthy, we need to give them (that means you!) the tools they need. The study, based on 940 small business owners, concluded that “small businesses that had a better understanding of asset based financing, including inventory financing, accounts receivable financing, trade credit, and equipment leasing financing, scored higher on the [study’s pre-determined] financial health index.” Over 33% of the businesses that had excellent financial health said they had a solid understanding of these asset-based financing products. Yet, over 33% of businesses with poor financial health said they had never even heard of or had limited knowledge of these four...
