Toolkit for success: Introduction
Things can go wrong very quickly in a small business,
but you might not notice problems until after the damage is done
-- unless you have a set of diagnostic tools.
These tools measure your performance and spot problems
in sales, profits, costs and the use of assets.
The savvy small business owner has five basic types
There's no substitute for writing down the calendar dates and
deadlines pointing out your company's intended milestone. Time
lines usually are made up of numbers, dollars and dates by which
a task should be completed.
Your ledgers, journals, balance sheets and other financial documents
are full of numbers. Here's where you use them. Stack them against
each other in various time-tested formulas and you can use the
resulting ratios to measure your success.
flow, profit and loss statements
Two of your financial statements -- cash flow, and profit and
loss statement -- provide special insight into your present financial
picture. They address sales growth, days payable, days receivable,
cost of goods sold, operating expense, net and cumulative cash
flow, net profit and cash on hand.
Some owners have the attitude that if they don't hear complaints,
everything is all right. Not so. It's important to seek out the
opinions of consumers -- both those who are and are not your customers.
This vital channel of information lets you learn about yourself
and your competitors.
Business owners need to listen to their workers, too. If
your employees are not being heard, you have a potential problem.
They will notice things in the operation of the business you will
Between them, these five tools let you look back at
your performance, assess where you are today and propel yourself
toward a successful future. Read on and you will leave here with
an understanding of each tool and how to use it.