Here is a fun question about how you are feeling right now about the financial health of your business.
No need to do any financial analysis to provide your answer. Just use your gut reaction to how you are feeling right now about the financial health of your business.
Please drop you answers into the form below.
I will provide overall results for you in a future blog post so you can see how other business as a group feel about the financial health of their business.
Becoming a Happy Owner
I define a Happy Owner as a person who owns all or part of a business and they feel confident about the financial health of their business. A Happy Owner is:
- Confident about the ability of the business to generate cash now and into the future
- Being paid a fair and consistent salary for the role they play in the business
- Receiving healthy and frequent distributions of excess cash from the business
- Confident they have the cash to support their growth plans
- Has a natural financial rhythm in place to measure, monitor, and improve the financial health of the business
This is where we all want to be as business owners. It is the exciting intersection of hard work and financial pride.
This is the type of business that is fun to own and operate. It’s a business with strong cash flows that support the growth plans of the business while also providing the owners with the money they need to meet their personal financial goals in life.
On the other end of the spectrum is what I refer to as an Unhappy Owner.
I define an Unhappy Owner as a person who owns all or part of a business and the financial side of their business is making them unhappy and uncomfortable. An Unhappy Owner is:
- Feeling uncomfortable about the current and future cash flow of the business
- Dissatisfied with the level of salary and cash distributions they are receiving (or not receiving) from the business
- Unhappy that everything seems like a surprise when it comes to financial results
- Unable to create a reliable financial forecast
- Feeling pressure to put more money into the business
- Uneasy about the amount of debt in the business (especially if the debt is growing rather than shrinking)
You Are Not Alone
Here are some examples of business owners just like you. Take a minute to consider whether some of these same scenarios and feelings may be playing out for you right now.
In one business, the owners were uncomfortable with their cash position. Cash was always tight… despite their feeling that they had made good progress over the last few years to become more profitable. They didn’t understand what was going on with the cash flow given the progress they had made on profitability. Both owners had been forced to put money into the business earlier in the year. And they had almost maxed out the bank line. Their debt was going up… despite having talked for years about the importance of bringing their debt levels down.
In another business, the owner was worried about cash because sales had slowed and the business was experiencing pricing pressure from customers. The cash balance was good, but he wanted a view into what cash and cash flow would look like if sales and margins came in below plan this year. Much of the discomfort with the financial health of the business was fueled by the frustration of not having a clear view through the financial windshield of the business. He felt like he was driving along the freeway at night with no headlights.
In another business, the owners had grown sales by 50% over the last two years. And they were on pace to do that again over the next two years. But the next leg of growth would be coming from the part of the business that provided services to large companies who required long payment terms. The projects in this side of the business were large and required spending money on payroll and supplies upfront. But payment from customers would come well after that money had been spent.
They felt good about growing the business but they knew that it would put a strain on cash in the short term. They wanted to put a reliable financial and cash flow forecasting process in place so they could plan in advance for the impact growth would have on cash. Specifically, they wanted to determine if they needed to talk to the bank about additional financing options. And they wanted to have that discussion well in advance of actually needing any money.
Assessing Your “Business Owner Happiness Score”
In my next post, I’ll share with you the overall survey results from other business owners so you can see how you compare.
I’ll talk about what your score means and what you should be thinking about if you are interested in increasing your Business Owner Happiness score.
My goal is to help you become a Happy Business Owner. 🙂
Philip Campbell is an experienced financial consultant and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.
Philip’s 35 year career includes the acquisition or sale of 35 companies (and counting) and an IPO on the New York Stock Exchange.
A Quick Start Guide to Financial Forecasting
Discover the Secret to Driving Growth, Profitability, and Cash Flow Higher
This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.
Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.
A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.
What if you had answers to questions like:
What’s about to happen to my profitability and cash flow?
How much cash can we distribute to the owners of the business?
How long will it take to pay off our debt?
What will our taxable income be this year?
A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.
Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.
If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.