February 4, 2013
Excellent article in this month’s Inc magazine about three metrics your small business loan customers must follow to ensure their financial success
Start a reserve fund.
Focus on margins, not just sales.
Sales only matter if they are healthy sales. A company that sells $100,000 worth of merchandise on which it makes 10% profit is a much healthier company than one that sells $100,000 on which it makes 5% profit. Yet the owners of both companies, if they rely only on sales figures, would seem to be equally successful. If I do not watch the margins carefully, my company will not continue well because the money to increase product lines and provide top-notch service will dry up. If you focus more on maintaining and improving margins, you’ll improve your company’s stability, and guarantee you’ll be able to stick around long-term.