Financial Performance
There are many essential tasks associated with starting and running your own business. None, however, are more vital to its health and success than understanding and actively managing the financial performance of the enterprise. Financial modeling and financial forecasting are at the core of performance.
Why Is Financial Modeling And Financial Forecasting Important?
Seasoned business owners recognize the success of their company depends upon building a solid financial plan, monitoring actual performance versus that plan, and identifying actions to take when life’s surprises cause business performance to take a turn in the wrong direction.
Financial forecasts and financial models provide valuable insight into how parameters such as start-up costs, product mix, labor costs, and cost of goods impact profitability and cash flow. Financial models allow you to adjust critical assumptions and inputs and immediately see how those changes will affect business performance.
Why Model And Forecast, When We Can Go With Our Gut?
- What price should I set?
- What is the most profitable product or service mix?
- How much can I afford to spend on marketing?
How you answer those types of questions will dramatically impact whether or not your business is ultimately successful. Relying on financial analysis and modeling instead of intuition and gut feel is essential if you want to maximize the profitability of your business.
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