Cashing out

A business goes bankrupt when it is unable to meet its payment obligations when they fall due, that is, bankruptcy is caused by a shortage of cash. However, a shortage of cash is not necessarily related to profitability. In fact profitable businesses can go bankrupt, while companies making losses can have substantial cash. Cash is king, but what is cash flow and what is the difference between...
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Focus on Top Clients

Do you treat all customers the same or do you treat them differently? Do you know which clients generate substantial sales and more importantly, which customers generate substantial profits and cash flow? In order to determine the relative importance of your customers, rank each customer in terms of the following criteria: 1. Sales 2. Profitability 3. Payment history.
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Creating Profitable Products

Companies often believe that they require a substantial range of products to compete, but more often than not they are better off with a smaller product range which will allow for increased business and sales focus and ultimately profitability. In determining what products to sell, there are a number of questions to consider: What is the cost of manufacturing or purchasing a product? What is the...
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Create Financial Statements….Properly

Being able to create accurate balance sheets, income statements and cash flow statements could be the difference between business success and failure. Inadequate financial controls are responsible for 75% of business failures. That is, one or more of the following financial controls may be absent or inadequate: cash flow forecasts costing systems budgetary control monitoring of key performance...
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Improve your Profit Focus

The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the principle of factor scarcity) states that, for many events, roughly 80% of the effects come from 20% of the causes. We all know of or have heard of the 80 – 20 rule and we glibly bandy it about, yet we seldom apply the principle in our own lives or business. Look at the following and see if you recognise any...
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