Bizzalley's Business Q&A

Q)How quickly should my inventory turnover within a year?
Bizzalley's Answer-For your business to make maximum profit, you’ll have to turn over inventory as soon as possible. Inventory that does not leave your possession quickly is at a higher risk of getting damaged, lost, unusable or even obsolete. There’s also a risk of its market price dropping meaning you’ll have to reduce the price in order to get rid of them. This is a situation every business owner should work towards preventing. This will require you to study and document periodic turnover rates so that you can identify patterns and changes. When this is done, you can then scale your production to match the demand.

Q)What is my business’s current cash position?
Bizzalley's Answer-If you want to ascertain the current financial strength of your business, all you need to do is determine its current cash position. This represents the amount of cash and other liquid assets your business has in relation to its expenses and liabilities at that point in time. In order to determine whether your business cash position is stable or unstable, you just have to do the calculations. If your liabilities/expenses are too close or slightly more valuable than your expenses, it may be time to do reevaluate your spending policies to address the instability. This should be done as often as possible so you can get a sense of the seasonal flows of your business.

Q)Do I have all the KPIs I need to make informed decisions about my business?
Bizzalley's Answer-Key Performance Indicators (KPIs) are the measures that businesses use to determine their performance over time. As a business owner, you need to define the essential KPIs for your line of business so that you can easily track the progress of your business. When deciding which KPIs to measure, you have to consider your business objectives, customers as well as shareholders. Some KPIs common to almost all businesses include Sales, Marketing effectiveness, cash flow etc. Taking the time to determine these indicators will help you make informed decisions about your business.

Q)Is my business’s cash flow management plan effective?
Bizzalley's Answer-Cash flow management is one of the most important financial management practices for a growing business. If there is a serious lag between when your suppliers and employees are paid and when your customers pay up, then you may have a serious cash flow management problem on your hands. In order to develop an effective plan, you have to start by measuring cash flow and making cash flow projections. Next, you focus on improving receivables by offering discounts to customers who pay on the spot, requesting deposit payments, issuing invoices on time etc. You should also employ technology to manage payables e.g. using electronic transfer methods to sort payments. Finally, make plans to accommodate shortfalls of either your suppliers or your customers. This will ensure that cash moves around your business at the rate which it is supposed to.

Q)Does my business have a realistic cash flow plan?
Bizzalley's Answer-No matter how strategic and well thought out your financial plan is, it’s useless if it is
unrealistic. In order to create realistic cash flow plans, you have to carry out actual market research to back up your cash flow predictions. You have to be pessimistic about the market value of your business. This way, you are not tempted to overestimate incoming revenue. You should also learn to budget for surprises so that unforeseen expenses do not shake your business to the ground. Putting all these factors into consideration will help you create a realistic cash flow plan for your business.

Q)Is my business bankable?
Bizzalley's Answer-A bankable business is one that has enough assets, profits, and liquidity to obtain a loan from a bank or any other financial institution. In order to build a bankable business, you have to first create a good business plan. Also, you have to build a reputation of commitment, integrity, capability and effectively running a profitable business. Finally, clean up your credit rating.

Q)Can my business meet all its financial obligations?
Bizzalley's Answer-First things first: how liquid or solvent is your business? The liquidity of your business will determine its ability to meet its short-term financial obligations while its solvency will determine its ability to meet long-term financial obligations. If your business possesses both qualities, congratulations it’s a healthy business. Upon comparison, if your business’s liquid assets (i.e. those that can be converted to cash easily) are more than its short-term liabilities, this implies your business is equipped to meet its short-term financial obligations. On the other hand, the debt to equity ratio is used to determine the solvency of your business.

Q)Is my business using the right financial tools?
Bizzalley's Answer-It’s 2018 and technology is at an all-time high. We can use it to improve every aspect of our lives including the finances of your business. No matter the nature of your business, it is highly recommended that you use digital accounting software. Its various tools like online invoicing records keeping and expense management will help you make the financial planning process a seamless one.

Q)Is my business currently generating enough net profit?
Bizzalley's Answer-Consistent profits are very necessary for building a healthy business. With the right financial tools and efficient bookkeeping practices, you should be able to determine your net profits. If at the end of the business year your net profit is not substantially positive, it may be time to establish and implement recovery policies to improve the viability of your business.

Q)My business is not making as much profit as I expected; how do I bridge the gap?
Bizzalley's Answer-Every business owner has specific business goals that they hope to attain. Sometimes,however, even the most solid plans fall short. If this has happened to you, there are several options you can explore. You can choose to dip into your business’s “rainy day fund” (every business needs one) and continue to chase after your profit goals. You can also turn to financial experts, your professional network or resource materials for lending advice. All of these will help you bridge the profit gap at best or help you prevent the incident from recurring at worst.