Assessing Your Financial Picture

Assessing Your Financial Picture

2 minute read

Helpful Questions from a Financial Consultant

During these uncertain times, it may be challenging for small business owners to get a clear-eyed view of their financial picture. Not only is it critical to understand your finances today, but it’s essential to be prepared with a financial outlook for your business’ future. The Starting Point sat down with Steve Dobrin, financial consultant, former CFO/VP Finance, and owner of Three Mountain Consulting to get his take on what to do next.

“As a first step, I recommend that business owners ask themselves the following questions,” said Steve. “I have offered preliminary advice with each question, and suggest that clients meet with their VtSBDC advisor for review, or connect with a financial consultant for a more in depth discussion.”

  • How are you dealing with inflation, raising your prices?
    • Rather than worrying about how much more to charge your customers, devote time to figure out how and why you should be charging them.
    • Consider updating or improving the products or services you sell 
    • Check which products and or services are overpriced or underpriced
    • Replace your pricing model and move your customer’s eye level to a lower price point.
    • Having projected income and cash flow statements are essential for combating inflation 
  • How are you tracking your margins?
    • A detailed margin forecast for the next six to 12 months will provide clear concrete numbers and allow proper sales planning and communication to customers.
  • Is your line of credit sufficient to account for the rising prices, and availability of products
    • Redo your projected income statement and cash flow statement, based on current projections to determine if your line of credit is sufficient.
    • With the cost of materials creating short- and long-term uncertainties, understanding your cash flows, is critical to effectively managing in these changing times.
  • Have you redone your rolling projections to determine if your line of credit is sufficient?
    • It is important with rising prices, longer supply lead times, that the projected Profit & Loss statement and projected Cash Flow statement be updated to present a correct financial picture.
  • Are you concerned about paying your energy bills this winter?
    • Did you know that you can have peace of mind, and not ride the roller-coaster of the significant volatility in fuel and energy prices in recent weeks?
    • Proper use of developing a solid financial plan to mitigate, manage and measure fuel and energy costs, is a decision that management should consider.
  • Have you created or updated your risk management plan?
    • A risk management plan documents potential risks to the business and the steps that should be taken to keep those risks at an acceptable level.
    • This is done by identifying, analyzing, prioritizing, treating, and monitoring the risk.
  • Have you calculated your EIDL repayments and does your projected cash flow account for these repayments?
  • Are you prepared for the increasing credit card processing fees because of rising prices?
    • There are several things that you can do such as
      • Negotiate lower rates, 
      • Reduce processing fees by accepting cards in person where possible,
      • Ensuring your account and terminal are set up properly, 
      • Using an address verification service.
    • Build the increased processing charges into a price increase, rather than alienating credit card customers.
  • Are you considering a new startup or expanding your business?
    • Create a new, or revised projected income and cash flow statement to help you properly manage your business.  

If you would like to review these questions and next steps, contact your business advisor.    
If you are not yet a VtSBDC client: 

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