Four Vital Signs of a Business Need to be Checked

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The vital signs of any business can be checked through its revenues statement, its cash flow statement, its income statement, and its balance sheet.

When a doctor wants an indicator of a patient’s overall health, he checks the patient’s vital signs: temperature, pulse, respiration, and blood pressure. These measurements are extremely helpful in offering up clues about potential health problems.

A business is similar in that it, too, has a set of vital signs. The vital signs of any business can be checked through its Revenues statement, its Cash Flow statement, its Income statement, and its Balance Sheet.

Any business that hasn’t done projections on each of these vital signs should do so as soon as possible. Here’s what these vital signs can reveal for any business:

Projected Revenue Statement – Sorts the projected revenues of a business into individual revenue streams. It shows where revenue comes from, the monthly and yearly summary totals from each source, and the percentage of total revenue from each one.

Projected Cash Flow Statement – Shows how much cash will be generated on a monthly basis. Also, it can be used to assure that the business model in place allows the payment of bills every month. It will also show what the yearly and monthly operating expenses are, what the break-even point is, and how much is left to either reinvest in or take out of the business at the end of the year.

Projected Income Statement – Shows revenues, gross profits, operating expenses, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) and net income, all on one schedule. When used properly, it highlights growth from one year to the next, compares annual revenues and expenses, and fleshes out projections for long-term success.

Projected Balance Sheet – A snapshot of the financial condition of a business at one point in time (usually, it’s the end of a fiscal year). Information gained here includes cash on hand at year’s end, short and long-term debt, and the ability to pay those debts.

For more information on these and other business vital signs, go to http://www.differencemaker.com and learn more from Steve Kaplan, the businessman’s guru.

CONTACT:

Michael Drew

850-747-8188

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