There are a lot of variables that determine whether or not your business will be successful or not. If you don’t have the right business idea, you won’t get too far. If your overall business planning is poor, success will elude you. Of course, an excellent plan requires excellent execution in order to succeed. If you don’t have the right people in place, your dreams of success will go up in smoke. Without continued innovation, it’s impossible to stay ahead of the competition.
Even if you have all those things going for you, your success is not guaranteed if you ignore some of the basics of good business. And one of those basics is having a firm grasp on your business financials. It may not be sexy. It may not have the same appeal as creating innovative new ideas. But it’s absolutely essential. Let’s take a quick look at what I consider the top five questions you need to ask regarding your business financials—if you want to develop (and maintain) a successful business.
1. How are your cash reserves? You’ll sometimes hear people claim, “Cash is king.” There’s a reason for that. Without adequate cash on hand you can find yourself in deep trouble. If you’ve been in business for any time at all you know that peaks and valleys are inevitable. Sales go up and down. And despite your best efforts to control expenses, you can get hit with surprises. Do you have the reserves to weather the storm? In order to function safely, you ought to have enough cash on hand to cover four to six months’ worth of expenses. That’s your safety net.
2. Are you forecasting, tracking, and managing your cash flow? Healthy cash flow doesn’t happen on it’s own. You need to make it happen. Needs may change, but you should be forecasting and tracking your cash flow for at least a 90-120 day period. That allows you to manage your money—instead of being driven by financial needs.
3. Who is keeping track of your financials? Again, it’s great to have a plan to keep track of your finances, but a good plan requires someone dedicated to executing the plan. Do you have specific individuals or departments responsible for making sure your financials are in order. It doesn’t have to be you—but it needs to be someone who understands how to do it, and understands that it is his or her responsibility. Beyond that, it’s important to have specific individuals who are responsible for key accounts. Losing control of key accounts can kill your business.
4. Do you know what your critical numbers are? I’ve talked about critical business numbers before, and it’s worth repeating. There are some numbers that are simply more important than others. Have you and your team identified those financial measurements that will ultimately determine whether your business succeeds or not? It would be worth your time to review that information.
5. Do you have a handle on your “laggers” and your “leaders”? You should have specific, targeted financial goals and objectives. Are you tracking your actual financials against your stated goals? In order to make necessary adjustments you need to know whether you’re hitting those targets or lagging behind. If you’re lagging behind, that doesn’t necessarily equate to failure. It may simply mean that you’ve got to make some adjustments. The same is true of your “leading” numbers. Do you know which numbers really drive your success? Are you tracking them to make sure they will keep driving your forward?
You may never win an industry award for “Best Financials in the Industry,” but that doesn’t mean your financials aren’t important. And if you don’t pay attention to these five critical questions, you won’t be around to celebrate your success.

Need help growing your business? With over 35 years of experience and thousands of companies assisted, Chuck Kocher and The Transformation Company can help you scale your business into a truly exceptional business capable of high growth strategies. Businesses are always changing, don’t let yours be left behind. Stand out with our business and executive leadership programs – designed to challenge and improve your business. Your business will thank you for it. Contact me today for a free consultation! 719-339-9505