March 26, 2021
Each month I get a chance to talk to many different business owners. Although they are scattered throughout the country, many of them are in California – Bay Area, San Mateo, Santa Cruz, and so forth.
As of my observation, I’m starting to really see a surge in a lot of financial statements. A V-shape recovery is happening as California started to let the businesses open again.
Since mid-March, restaurants are accepting dine-ins and it has caused a huge increase in revenue for a lot of businesses. Moreover, the stimulus checks, the resurgence of PPP money is also showing up for a lot of business owners.
In fact, I just witnessed an increase of 70% in one of my client’s revenue. Not only that but hiring new employees should also be on the way as business owners are needing it.
Making Impulse Decisions Could Have Long-Lasting Damage
Hiring new employees or buying new equipment for the office should be handled with care. Though many businesses are doing so much better compared to last year of the same month, business owners should slow down.
I have been asked by many clients a question like, “Can I buy a new machine?” There are also statements like “I want to hire new people”. These phrases are very common and understandable since many employees were let go because of the pandemic.
But the one question that all of them ask is: “Can we afford it”
And it’s a legitimate question. Because a lot of times, people do impulse buying and decisions. However, not all can do it. They need to think of whether or not they are as financially positioned and be able to pull it off.
Though a business has cash on hand or can just go to their banks and look at their balance and there is money to spend, double-checking should be done.
Furthermore, putting together a budgeted forecast is the way to go. A projected budget for the next three to six months or even a year should be done.
Calculating a projected revenue for the same time frame is important so the business could achieve a well-projected budget flow. Also, adding the things that you want to buy, the people you want to hire into the equation should tell you what the future of the business will be.
On the other hand, you also need to take into account things like training, taxes, and the pandemic. Times might be stable now, but nobody could really tell.
Lastly, calculating these budget and revenue forecasts might be difficult. That is why it is better to hire an accountant or CPA.
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Chief Experience Officer
“Know Your Numbers, Know Your Business”