Starting a business is a big achievement, but running a successful business is a much bigger challenge. There are many common challenges that face every business whether they are large or small, such as hiring the right people, building a brand and maximizing productivity. However, there are some challenges that are unique to small and mid-size businesses, particularly those who are growing. Statistics suggest that 50 percent of new businesses will fail within their first five years of operation, and a whopping 70 percent will not last 10 years.
While there are many challenges businesses must overcome as they grow, maximizing their financial assets is at the top of the list. In today’s markets, it’s tough enough to turn a profit even when you do everything right. There are some common financial management mistakes your company should steer clear of, such as:
- Failure to plan
- Not knowing the true cost of goods or serices sold and/or overhead costs
- Having the wrong mixture of debt and equity
When looking at trends over time, benchmarking current metrics against past performance and industry averages gives you a more complete idea of your company’s financial health, as well as implementing a process for measuring and tracking those metrics and ratios on a regular basis.
Download our whitepaper, Five Crucial Types of Financial Metrics and Ratios for Growing Business, to get a list of top five types of key financial metrics and ratios that are almost universally relevant across industries to measure the financial health of your business.