One of the main pillars of a successful business is ensuring that it is profitable and receiving positive cashflow each year. It is critical to follow the best money-management practices to see your business thrive. Andrew Miller, Polycom, Inc.’s former CEO and president, was able to provide us with these key strategies to ensure your company is making the most of its income.
Develop Your Budget
First and foremost, you must determine the company’s financial targets. Creating an annual budget for the business and outlining what money is to be spent where will allow your staff and board to understand what the organization will be undertaking within the year and the anticipated financial goals. As the year precedes, a budget may also require reevaluation. If your company does not bring in the anticipated net financial result, it is important to rethink and change the budgeted expenses.
Keep Track of Your Expenses
As CEO, Miller ensures that the operating costs of the organization are always less than the profits of the company. When you are in a deficit, you cannot expect to prosper financially. Understanding how money moves through your business is key. Start by learning about your operating costs, gross margins, assets, and liabilities and how to deal with each of these components.
Expect the Unexpected
Rather than putting out fires, it is the CEO’s responsibility to find a spark and extinguish it before it has the chance of becoming a fire. When operating a business, you must imagine the worst-case scenario and potential pitfalls to put strategies in place to prevent unforeseeable losses from occurring. A loss avoided will always be a victory for the growth of a company.
Focus on Success
In order to prevent complications in the future, it is important to address your failures to see what went wrong and what you can fix to prevent it from happening again. However, it is also important that you focus on your successes. When something works well, capitalize on the opportunity to understand why it went well and how you can continue to see great results.
If you are grappling with the finances of your company or are searching for a way to increase your profits, you will be on the right road by following these best money-management practices.
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