4 Ways to Map Out Your Business’s Financial Future
As an entrepreneur, it’s essential to plan for your business’s financial future, especially in the post-pandemic world. Here are tips that can help you map it all out.
Air Date: November 16, 2021
Moderator: Jeanette Mulvey, Editor-in-Chief at CO—, U.S. Chamber of Commerce
Featured Guests: Tom Kelly, Director of Product Marketing, Oracle NetSuite, Mowa Haile, President, Sky Blue Builders, Nikki Riojas, Owner, Made in Corpus Christi, Stephanie Sims, Founder, Finance-Ability
Every business owner should be aware of their financial future so they can understand how to track and plan their success. Especially during the challenging economic landscape of the pandemic, it’s important to capitalize on what is driving your revenue and develop a strategy for measuring and sustaining those efforts.
During a recent CO— Roadmap for Rebuilding panel, business leaders and financial experts shared four ways to plan and map out your business’s financial future.
Businesses Must Identify What Is Driving Their Revenue and Act Accordingly
According to Tom Kelly, director of analyst relations at Oracle NetSuite, it isn’t enough to simply notice your balance is rising. Rather, you must understand what is driving the increase. Once you identify these factors, you can share them with your team to better focus your efforts.
“Make sure it can be distributed amongst the workforce so that everybody has something to do and knows that their actions are making an impact on the positive projection of the business,” Kelly said. “It’s important to take a balanced approach, but it’s very important to have key insight in terms of the things you should be focusing on.”
“It’s one thing to have a great plan; it's another thing to have a mechanism that you can deliver to the organization so they can absorb it and do something with it,” he added. “Just having more revenue doesn’t mean you’re a profitable business. You could have a lot of revenue, but if you have exorbitant costs, you’re not making any money.”
Entrepreneurs Should Review Patterns to Know Which Products Are Selling
Nikki Riojas, the owner of Made in Corpus Christi, stressed the importance of choosing products that really suit your company and serve its bottom line.
“I think the first thing that we look at is, ‘Does it fit with our brand?’” said Riojas. “If it's not going to fit within the overall aesthetic and what we sell, then I know it's not going to move off of our shelves.”
Riojas added that her brand started with a consignment model that had a 30/70 split since they didn't have a lot of cash to invest in a new product. While it did help fill their shop and our shelves, it wasn’t a model they wanted to maintain.
“I ended up switching over, and I just buy everything wholesale for my vendors now upfront,” Riojas continued. “As we've grown, I know what we'll sell based on historical data, but I also know what we'll sell because of what our customers' and our clients' feedback is.”
Leaders Should Manage Their Business by the Numbers
As a small business owner, it’s crucial to develop a holistic view when analyzing your numbers and forecasting forward.
“As you grow, you have to learn to manage your business by the numbers,” said Mowa Haile, president of Sky Blue Builders.
This includes considering your overhead and revenue to determine your profitability, as well as keeping a close eye on your costs.
“If you don't know what your costs are, then you're not really doing a good job for running your business, especially now with the pandemic … [with] material shortages [and increased] labor costs,” said Haile.
Business Owners Should Equate Business Expenses to Potential Investments
Many business owners cower in the face of business expenses — even if they’re necessary purchases. However, Stephanie Sims, founder of Finance-Ability, encouraged leaders to shift their mindset and view spending and costs as investments in your company’s future.
“Start to think about everything that you do in your business as an investment,” said Sims. “That way you can make your resources go a little bit further and see … where you're getting success in your business.”
Sims added that you should start connecting these investments to a “success metric” in your business.
“When you start to connect those success metrics … it allows you to be sure that you're investing in the right things in your business,” she said.