If your screen printing business is humming along, with orders rolling in and sales increasing, it’s easy to assume that your business’s finances are in perfect shape. Running your business well means making it a habit of inspecting your finances in a more in-depth way.
If you’ve never given your business a financial check-up, now is the time. To make sure your business’s finances are shipshape, you should be making sure of the following:
Sales and revenue are growing…
A business that is well-poised for the future will see consistent sales and revenue growth. Don’t just look at the overall numbers, however, take the time to evaluate your revenue. Are you seeing spikes and growth due to one-time orders, a larger-than-average order or because you’ve raised your rates? If your sales are truly in good order, you will see sales growth due to larger orders on a consistent basis, an increase in your customer base and loyalty from repeat customers. Long-term consistent revenue growth means a growing sales base; if your revenue is growing due to one-time purchases or occasional larger purchases, you risk seeing a drop off in your growth, or worse, your overall revenue.
…while expenses are flat.
When your business is up and running well, you should see a leveling off in your expenses. Your expenses should become a relatively fixed point that you can count on month after month. If your business is expanding, you’ll likely see growth in your expenses, but a good rule of thumb for financial health is that growth in your expenses shouldn’t outpace growth in your revenue.
Your business accounts are in your business’s name.
As businesses get up and running, entrepreneurs often aim to do things the quickest way possible. When it comes to opening accounts and securing loans or credit cards, that often means declaring yourself the sole proprietor of a business and opening all of your business accounts in your name. If that was the course you took, it’s time to shore up your business’s financial health by separating your business and personal expenses. This will help protect your personal financial health should something happen with your business.
You have good cash flow and some savings.
Running a business is all about cash flow. You need to see money going in and money coming out, and you never want to have to turn down a purchase order or panic in the face of necessary equipment repairs because you don’t have the money in your business account. While it is important to reinvest in your business, you never want to have more money going out than you have coming in, and it’s important to keep a cushion of cash as your business growth allows so you have money on hand if a business emergency strikes. If you do feel that your business is in need of an investment to help with growth, maintaining your cash flow might mean exploring financing options rather than paying cash, even if you have the cash on hand.
You’ve addressed any debts.
If you’ve struggled with cash flow for your business, that could mean that you’ve accumulated debt. While some debt is alright for business, and can even help you to secure loans in the future, debt that piles up and becomes unmanageable can mean doom for your business. Before you throw in the towel because you have some bills you don’t know how to address, face your debt head on to find potential solutions. If your current payment plan isn’t manageable, many companies will work with you to restructure debt in a way that your business can handle so that your business can get its debts paid off and find success.
You’re regularly evaluating your SWOTs.
If your business finances are in good order already, that’s great, but keeping them that way means being proactive. Many successful businesses make it a habit of evaluating their business’s SWOTs monthly or quarterly so they can identify what they’re doing well and what they need to work on or watch out for to avoid problems in the future and continue their financial growth. What are SWOTs? Strengths, weaknesses, opportunities and threats. Schedule time to evaluate your screen printing business’s SWOTs as a way to avoid unexpected problems.
So what kind of shape are your screen printing business’s finances in? Even if your finances aren’t quite shipshape, you can right your financial ship to ensure your business’s success both now and in the future. The first step is being aware of where potential problems with your finances lie, and making a plan for correcting any problems, or potential problems, with your current financial structure.