Understanding Your Business Finances

As a small business owner, how do you manage your cash flow? Have you really got to grips with your everyday accounts? How confident are you talking to banks, investors and financial advisers?

Please answer all of the following ten questions to help us determine how well you understand your business finances:

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There’s a popular finance catchphrase, ‘Cash is king’. When did you last review your cash flow and update your cash flow forecast?

Within the past week

Within the past month

More than a month ago

I don't have a cash flow forecast

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How do you keep track of transactions (sales and expenses) in your business?

I use a manual cash book

I use a spreadsheet

I use a computerised accounting package

I wait until year end and give all my invoices and receipts to my accountant

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How confident are you with the financial management of your business?

Not at all

I’m not confident but just get on with it

I'm quite confident but would like to understand it more

I’m very confident with it

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If you were asked by your bank manager to explain your breakeven point, would you:

Have to admit that you didn't know what that meant

Explain that breakeven was in line with your working capital assumptions

Explain your pricing and your variable and fixed cost assumptions

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How closely do you monitor your gross profit margin?

I have no idea what it is

I know what it is but ignore it

I review it every month

My accountant does this