Archive for June 2013

Sometimes it’s nice to get brief, straight-forward, no nonsense answers to business questions without all the jargon. There really doesn’t need to be a shroud of mystery surrounding finance topics.  Finance is not rocket science, but then again, any topic is challenging if it is unfamiliar to you.  So here goes my best shot at…

Yes. There is a reason that QuickBooks has a 90% market share in the small and medium sized business demographic.  The software is inexpensive, user-friendly for non-accountants, flexible, and capable of creating just about any information needed.  Even poor data entry can normally be cleaned up easily by those of us who have become QuickBooks…

It’s rare that a company can effectively grow without the assistance of bank debt.  Managed right, debt is our friend. Purchases of equipment that will last several years should be financed over a term of 5-7 years so that the debt payments are matched by cash inflow from customers that buy the goods you created…

Improving financial performance first requires that you compare your company’s performance against the competition.  Most owners of small and medium sized businesses are caught up in the daily details of business and require a little help in identifying the profit leaks in their operations. At that point, you have direction for improvement, and as we…

Many people in business wouldn’t think so.  But the answer is yes.  A good CFO takes care of things you would otherwise be distracted by, thereby freeing you up to increase sales.  If you are like most small and medium sized business owners, you have gradually over many years allowed yourself to get away from…

Financial statements are so much more than year-end tax reporting.  Monthly reports are a key indicator to smart business people as to how they are performing, and how they can improve.  If you own a small or medium sized business, you surely work very hard. Shouldn’t that hard work translate into measurable success? Accurate financial…

What is EBITDA? EBITDA stands for earnings before interest, taxes, depreciation, and amortization.  Put more simply, it is a gauge for outsiders to determine how much cash your business would generate if they bought it.  Most businesses sell for 4-6 times EBITDA.  Yes, EBITDA is very important. If you are planning to sell your business…

There are several ways to look at efficiency.  Here are a couple of my favorites. Gross profit percentage.  In 30 years of finance, the truly successful companies I have worked with all had gross profit percentages of 40% or higher.  The goal for 40% margins makes a lot of sense once you consider that at…

That question is best answered by starting with the end in mind.  How much money, after tax, must your business sell for in order to create a nest egg sufficient for you to live the lifestyle you want to live after the sale?  That’s the starting point.  Now compare that price to what your business…