October 7, 2012
Opening a business is an adventure for the owners and when first opened the one key idea for any owner is to make sure that their business is successful and able to make money so the owners can live off their earnings. Unfortunately, when it comes to businesses many people do not think long term and do not come up with a plan for financial sustainability. There are a few key ideas in regards to businesses and financial sustainability and if followed properly, businesses will not only be profitable, but also successful.
Financial sustainability first starts by having a plan of sustainability. It is important to “develop long term goals that outline where you want your business to stand financially in the future” (Sustainable business practices). In order for a long term goal to be successful it is very important for businesses to stay away from making short term financial decisions that will show immediate gain, but will affect the business to achieve their long term goals (Sustainable business practices).
Another part of financial stability is to make sure that businesses maintain cash flow. According to Bridget Behe’s article titled Examine your Financial Sustainability to Stay on Track, “improving cash flow may mean asking suppliers for extended terms on purchases, which can stretch the financial capabilities of the supplier” (Behe, 2008). Sustaining cash flow also includes taking a look at the company’s debt, both good and bad. Dealing with the bad debt by eliminating it yet making sure to keep and maintain their good debt, “good debt enables a business to grow and expands when it can’t afford to do so internally” (Behe, 2008).
Having and maintaining clear and accurate financial records is a very important key for any business or company’s financial stability (Sustainable business practices). A balanced register of positive and of negative cash flow should be kept... [continues]
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