In the current economic climate, implementing consistent financial management for your business is more important than ever. Whether you have engaged a financial consultant, or you’re going it on your own, there are a few basic strategies you should follow. Here, we share some of the most important guidelines:
Know Your End Goal
You must establish your end goal by asking yourself some crucial questions. What do you want out of the company? How will your business help you to achieve the quality of life you want? A good financial consultant will help you to answer these questions and create a realistic path forward, or modify your existing strategy, to help you achieve your end goals.
Take a few moments to think about possible scenarios and their outcomes, and then analyze how you would handle each one. For every decision you need to make, consider the best and worst case scenarios and ask yourself key questions that will allow you to make an informed decision.
For example, a best case scenario might be: “What if this strategy succeeds? Will I re-invest the profits or will I take a bonus? Will this success provoke a further investment for the future?” On the other hand, a worst-case scenario might include questions such as: “What if I lose a substantial amount of money? How will I recoup my losses? Will I need to borrow to keep my business afloat?” Allow your financial consultant to engage with you on possible outcomes.
Frequent Review of Financials
Review financials frequently. Identifying your most profitable business activities expeditiously will help you to take advantage of growth opportunities. Consequently, identifying areas where you are losing money will help you to “stop the bleeding” sooner. Obviously, it’s crucial to know the difference. You may want to engage a financial consultant to conduct a thorough financial review, especially if you do not have the time to do this on your own.
Be Prepared to Act
Don’t be a procrastinator! Be ready to take some action. If the writing is on the wall, be ready to move. Don’t wait to act, and when you’re losing money, don’t expect the impossible! If your financial situation is consistently looking dire on a week-to-week basis, communicate with your financial consultant – and be prepared to make whatever adjustments are necessary to eliminate unnecessary expenses in order to remedy the situation.
Evaluate Economic Opportunities
Evaluate the economy, identify prospects and take advantage of opportunities that present themselves, in a timely manner. Always remember the old adage: “If something feels too good to be true, it probably is!” Therefore, it’s better to analyze each opportunity on its own merits, and it could be helpful to discuss the details with your consultant or advisor before jumping in. The best financial consultant is the one who will have conversations with you about these items, and will help you to analyze the pros and cons before you make a final decision.
For questions about any of the advice contained in this article, feel free to contact us directly.
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