How well do you REALLY know the financial situation of your agency (or any business). I am not talking Profit and Loss as this only shows historic performance.
I am talking about the real figures that indicate the financial health of your business NOW and most importantly in the future.
Do you know…
- What is your burn rate?
- What is your break even point?
- Do you have budgets? Do you review them monthly?
- Do you do monthly cash flow forecasts?
- Are you doing scenario planning?
It is like having a car and only looking at how many miles you have done instead of looking at all the other metrics such as:
- How much petrol have you got left
- What is the temperature of the car
- Are the tyres running at the right pressure
- Is there enough oil in the car
Tough times ahead
With the recession looming, harder lockdown approaching, Brexit we are heading for uncertain times that will impact all agencies.
Knowing your financials is absolutely vital for 3 key reasons:
- Business Survival – knowing how long your business can last is essential.
- Loans / Finance – Banks and gov will be scrutinising existing loans and you will need this information if applying for new financial support and loans
- HMRC – Are now a preferential creditor for businesses so they will also be scrutinising businesses and having these financial indicators will help satisfy their needs.
If you don’t know these figures I urge you to get financial support – not just your accountant but look for a Financial Director (there are many interim FD’s) and other business support advisors.
If you are an agency and need help then please get in touch now.
This article was originally posted on LinkedIn.