Hire A Firm Focused On The Real Numbers You Need
Every business should be focused on generating more CASH from their business. Not revenue or profit, but CASH. Why?!
Because CASH is what you actually take home and put in your own bank account. Revenue doesn't account for expenses or operating costs. Profit doesn't account for taxes, debts or additional assets. So it doesn't matter how much you make in sales or profit, it matters how much you actually keep... aka CASH.
Here at Hammernik & Assoc, we help small businesses analyze everything in their business finances to understand what drives more CASH for you. We help you focus on the aspects that increase the cash flowing into the business while identifying all avenues of cash flowing out of the business.
This leads to you making smarter financial decisions about your business so you make more money from the business. Want to learn more?! Let's talk!
CFO Services in Waukesha & Milwaukee County
Looking for a partner to help analyze your business finances? Let the experts at Hammernik & Associates help you every step of the way. Whether you need a cash analysis or remote CFO services as your business grows, we have decades of experience to show you the true metrics your business is producing. Let us shine the light on the areas to help your business grow where it counts the most... your wallet! Contact us today for a consultation.
The Critical Drivers of Cash Flow
Many businesses fail to reach their 5th birthday (about 50% according to the SBA) because they run out of cash. They fail to understand the true drivers of cash flow because it's not often discusses on financial reports. They drivers are divided into several categories:
- Revenue Drivers
- Profit Drivers
- Cash Flow Drivers
All of the categories play off each other to create a full picture of the financial health of a business. In total, there are 15 individual drivers that fall into these categories so let's break them down in a little more detail.
Revenue Drivers
Leads
The number of individuals who are a right-fit for the business, have been made aware of the business through marketing efforts and have indicated that they may be interested in purchasing.
Conversion Rate
The percent of those leads that the business has been able to convert to a closed sale.
Retention Rate
The percent of all past customers that the business has been able to retain this year.
Cumulative: Goal is to get any customers who have purchased in prior years to come back.
Recurring: Goal is to get the same customers to come back month after month.
Purchase Frequency
The number of times a customer purchases this year (regardless if they’re new or retained)
Avg. Purchase $$
The average amount of each purchase that a customer makes.
Profit Drivers
Revenue
The amount of sales the business is able to generate through the five revenue drivers.
Cost of Sales
The direct costs that the business incurs when they make a sale. This driver is defined as a percent of revenue.
Payroll Expenses
The amount of expenses related to paying employees and contractors that are not included in the Cost of Sales.
Marketing Expenses
The expenses needed to generate revenue. This driver is defined as a percent of revenue.
Overhead Expenses
The amount of all other operational expenses incurred in the business.
Cash Flow Drivers
Accounts Receivable
The amount owed to the business from their customers.
Inventory
The amount tied up in purchasing goods for resale.
Assets
The amount of the tangible and intangible items that the business either buys or sells.
Debt
The amount of cash borrowed for use in the business.
Owner Withdraw
The amount of cash that the owner puts in or takes out of the business.
Do You Have A Plan?
- Are you tracking these numbers MONTHLY?
- Are you working IN the business instead of ON the business to grow?
- Do you have a scorecard to quickly identify weaknesses in the business?
If these questions seem overwhelming, let Hammernik & Associates help! We help small businesses analyze and track their business finances to help them push the correct drivers forward, make more money, and actually enjoy the business again!
