5 Financials Every small business should track down from day one and why, here are five basic business figures

If you start a small business, you probably have some basic finances in mind. how much to calculate, how much you want to take home every year, etc. However, you probably have not set up any financial modeling or reporting.

Unfortunately, the first few months and years are the time you need to keep track of this information first of all. It is the period in your business life when most of the decisions that shape the business for years to come are taken. Without good financial data, these decisions are often made on the basis of individual results or worse instincts.

To avoid this, here are five basic business numbers that you should follow from day one in your business.
And if your business is already running, do not worry, just start ....

1. Cashflow Runway:

It's okay to be hopeful, but do not be an idealist. You will not make a profit on the first day ... maybe not in the first year. To survive, you need to know at all times how many months your company's cash flow or runway has before going bankrupt. You also need to know the industry average over time to achieve consistent profitability for your niche. Once you've learned the industry average, count 20 percent on the safe side. Then have a look at your cash flow runway. If you have enough runway, you are fine. If not, look for more funding as you are already broke at your current funding level, regardless of how much money is in your bank account.

2. Receivables% Overdue:

You can look back on your business plan and believe that you have made a profit on paper ... if indeed, your books show that your sales far exceed your overhead. But if you do not collect that money from these sales, that profit will never be realized. Look at the percentage of on-time paid sales versus late sales. Look again at your industry average ... are you at eye level? If not, then you assign someone (possibly you) to track down these claims and ensure that they pay the penalties you assigned for late payments. If you do not track the receivables, you will encounter cash flow problems.

3. Monthly cash flow forecast:

Most companies do not really fail, they go bankrupt. A failed business is one where the sales proceeds are insufficient to cover the costs. In contrast, an interrupted business is one that can not meet the cash flow requirements of a given phase of this business. This is the much more common problem and it is completely avoidable when monitoring your monthly cash flow forecast. For example, if you're retailing, you need to make sure that you'll need cash to top up your inventory, or that you'll need a lump sum to pay the helmsman every year. Model your cash flow from month to month, because determining the month you can not bill is much worse than 9 months if you can do anything about it.

4. Cost of goods sold:

Yes, it is exciting to do the first sale and the second sale and even a bulk sale. However, do not forget that these sales must be profitable to equate to business success. If you do not keep a close eye on the cost of your goods sold and you are not regularly checking these costs, you may not realize that you are actually losing money on some sales. This undervalued sale can mean a short-term cash injection, but it's a long-term bankruptcy.

5. Sales allocation:

You've heard the cliche before - do not put all your eggs in one basket. In other words, a company with 100 small customers is far more secure than a company with a large customer. Vary your revenue from day one and continue to compare that diversity with your industry average. The more diverse your sources of income, the better. This diverse source of revenue is less prone to shocks when one customer expires, which will eventually happen, no matter how good the service you provide.

The early stages of a business are some of the busiest times. They are still trying to develop a product and a business model and, for example, tracking financial resources may make it less important. Unfortunately, the instinct to stop basic financial models is one of the worst decisions you can make. Instead, provide regular tracking so that avoidable business killers such as a lack of income, unclaimed receivables and improperly purchased goods do not happen to you.