Small businesses occasionally have to go through the hard knocks of learning to develop and maintain a bottom line that does more than just break even. Basic things such as hiring an office manager, or figuring out the best timing for payables can be the difference between success and failure.
Simply knowing exactly what you need to cover your overhead can keep your company ahead. Mike Yantis of Yantis discovered that his construction company had overhead issues. After close examination of where the company stood, he figured out how his company could bid jobs in the future based on whether or not overhead was covered first and profit managed second.
Collections are obviously one of the most important aspects of keeping your company going. Unfortunately, collection companies have had a 15% increase between ’94 and ’95. Small companies need to try to avoid relying on an outside collector to bring in revenue since this is simply another area where avoidable costs can be incurred. Simple interviewing techniques can help a company avoid collection issues.
Sometimes it’s good to give your company a financial physical to find out where weaknesses lie, understand why they exist and learn what can be done to avoid them in the future.