Aside from poring over one’s accounting records and finances, most small business owners find it difficult to accurately gauge how well their business is doing aside from rudimentary rubrics. There are however, other possible metrics that may be utilized by a business owner to accurately assess the health of a business.
Dave Lavinsky,co-founder of Growthink, points to six metrics to look out to assess the sales for a business: (1) Total sales by time period; (2) Sales by product or service; (3) Sales by lead source; (4) Revenue per sale; (5) New vs. returning customer sales; (6) Sales per prior activity. “Declines in the sales of certain products might mean new product versions are required. Conversely, an ongoing increase in a product’s sales can help you forecast demand and make sure you maintain the appropriate inventory levels,” notes Lavinsky in an Entrepreneur Magazine article.
Lavinsky went further, talking about how “Tracking the results of each of these efforts will allow you to see what’s working so you can do more of it. You also identify what’s not working, and can fix it right away.”
Monitoring sales is one method of tracking the progress of a business and also toward raising the necessary capital for expansion. Along with the aforementioned six metrics, business owners should also look at the broader plan for their business prospects. Asheesh Advani is CEO of Covestor, notes that “If you’re like most entrepreneurs, you’ll constantly fluctuate between conservative reality and an aggressive dream state which keeps you motivated and helps you inspire others.” By keeping track of costs and also planning for the future, business owners will be able to seek the opportune time and method to expand their business.
One of the biggest challenges of course, that businesses face, is possessing the capital necessary to make investments in new technology, facilities, or equipment. The solution lies with factoring.
Factoring is the process whereby an invoice or purchase order is submitted to the factor for credit approval. First the product is shipped or the service is performed. The invoice and related support is submitted to the factor.
The invoice is typically used to draw eighty to ninety percent (80-90%) as a cash advance from the factor prior to payment by the customer. The remaining ten to twenty percent (10-20%) is held in reserve with the factor. When the payment is received, the factor releases the reserve less the charges incurred back to the company.
Capital Solutions plays an invaluable role in serving the business and manufacturing sectors. From looking into processes and whether finished goods are purchased from a single supplier produced on-site or a combination of both in the case of the manufacturing industry to catering to the seasonality of the apparel industry and assisting service-oriented businesses and wholesalers, Capital Solutions recognizes that business and manufacturing are playing an important role in economic growth.