Often you hear business owners talking about their multiple six and seven-figure businesses, which causes much confusion in the entrepreneurial space. Having large revenue numbers like that is excellent, but without understanding fully what that means, it can be unclear to know how great an achievement it is. To an accountant, revenue is not as impressive as profit. If your business is making a profit, that is impressive. But many multiple seven-figure businesses have gone bankrupt due to a lack of profit.
Profit is how much money your business is making, and it takes all your revenue less all your expenses for a specific period, and what is left over is taxable profit. It can be frustrating for many business owners to understand their business finances and cash flow when they don’t know who can help them.
The coaching industry has exploded over the years, and you can find a coach that can help you with any topic. But have you considered how a business finance coach can help you?
A business finance coach is a business coach who focuses on how to help you manage your business finances so that you can make your business more profitable and learn how to manage the cash in your business with confidence.
The financial data in your business is telling you a story and it’s up to you take that financial information and interpret the data. For example, financial reports can tell you how well an offer is selling and at what profit. If you have several offers, you will know the profit margin of each offer and ultimately know which offer you should focus your attention on to make the most profit.
Understanding the financial data in your business isn’t about accounting and debit and credits in your business. It is about understanding your business on a more intimate level. When you know your business finances, it makes you the best CEO of your company and leads you to make the most informed and profitable decisions.
Ways a business finance coach helps you set up your business for success:
1. Identifying money leaks in your business
When you get to know your business numbers, you can identify where the business has been leaking, wasting, and money. It gives you a chance to plug those leaks, thereby keeping more money in your business.
2. Understanding how profitable your business is
If your business is not making any money or operating at a loss, you need to be aware of this to make changes and make your business profitable. If a business goes too long without profit, it will go bankrupt.
3. Tax planning to avoid surprises
When you are aware of how much profit you are making in your business, you will estimate an upcoming tax bill that will save you from tax surprises. Taxes are stressful to most entrepreneurs because they don’t know what to expect, but you will no longer be surprised with good planning. You will have confidence because you will be prepared.
4. Creating a financial plan for your business
When you create a financial plan for your business, you are committing to the financial goals that you want to accomplish in your business. Having that plan formalized provides your business direction and holds you accountable for the outcome. You learn how to review your financial information regularly to ensure you are on track to meeting your goals.
5. Ensuring proper financial management
Financial mismanagement in business is one of the top reasons why businesses fail. Being proactive with your finances allows you to course-correct and avoid significant problems that will be costly.
The bottom line is that the best business ideas can fail due to mismanagement in business. Financial management is critical in business and should not be ignored. Often business owners try to avoid it for fear of what they may find, but the longer it takes you to manage your business finances, the more risk you are exposing to your business. Risk because you are losing money and losing a potential opportunity to save your business.