1) Do Not Go It Alone
Mismanagement of finances is not limited to start-ups, but affects all businesses. Many business owners can produce and sell their goods and services but cannot manage their finances. You won't know where you're going if you can't remember where you've been. Accountants and bookkeepers can help your company establish a financial foundation and make predictions about its financial future.
2) Examine Historical Data
Creating a financial history of your company's finances provides you with valuable present-day lessons that will guide you into a more profitable future. Examining financial records can help you determine what to do and what not to do in your business. Gathering historical financial data can assist your bookkeeper or accountant in determining the causes of your success or failure.
Project Sales and Costs (Key #3)
Once you've completed the second key, you'll be on the right track to projecting sales and costs. Forecasting sales and costs in the absence of historical data can be difficult, but not impossible. Projections for your company are not a one-time event; they are an ongoing process that helps determine areas of growth and change. Sales are always easier to forecast than costs. However, sales should not be your primary focus; rather, the company should be profitable!
4) Create Financial Statements
Financial statements serve as the foundation for the accounting cycle. In other words, the income statement, balance sheet, and cash flow statement all show how well your company is doing financially. Financial statements should be prepared with accuracy and structure all financial data in an easy-to-understand manner. These statements help you evaluate financial performance and make key business decisions.
5) Change Assessment and Implementation
This is the last component of the financial business model. Once you've established the first four keys, you'll be able to assess your company's financial position and make changes as needed to ensure financial growth and success. The financial statements will reflect your company's historical information, and decisions about the future can be made based on that data.
The financial business model gives you clear information to help you make sound financial decisions that will lead to long-term success. Applying these five keys to your business will put you on the path to meeting your objectives and turning a profit!"""