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Business Finance Test
Existing Business Looking for Capital
Issues that need consideration prior to looking for additional capital. Is your own house in order? First, review the 13 major reasons businesses fail .
Next order our Business Finance Test Report (#3) to review the non financial indicators of a strong or weak business. This self administered test is one we use on turnaround consultations as a baseline for further corrective action with a company in trouble. Key areas covered include the following types of questions:
- Liquidity: Is the company current on Federal and State Withholding Taxes?
- Growth, Profitability and Control Systems: Does the company have program to quantitatively measure customer satisfaction?
- Management: Is
it multiplying or dividing your business equation?
- Does the CEO interact with all levels of staff and management?
- Is the turnover of management staff greater than 20% per year?
- Does the Board of Directors bring constructive ideas for growth to meetings?
- Has the ratio of debt to equity changed over the last year?
- External factors
that indicate trouble
- Does your banker call often and request additional collateral?
- Does the CEO spend more than 10% of his time on legal matters?
- Is more than 35% of the company's operation dependent on one vendor or one customer?
- Is the company's pricing policy tied to the dominant firm in your industry?
- Are you familiar
with the Z Score for your company and industry and know where you stand
financially.
Note: the Z Score was developed after many years of analyzing companies and their financial dynamics. This formula takes into account the income and expense, balance sheet and cash flow statements. Z Scores can accurately predict (95% probability) the likelihood of a company health or slide toward bankruptcy.
If you are just starting your own business
Most startups do not spend enough time in the pre-incorporation stage. There is always pressure to get incorporated, get some money and get started. While we agree this is important there are other issues that should be decided first.- Starting with the most important the goals of the founders and the exit strategy.
- Next comes the business format compatible with the goals of the founders.
- Next how the business now and in the future might integrate with the founders and future stockholders tax and estate problems.
- Buy/Sell Agreements for shareholders coming and going, key person insurance and valuation methods for future capital exchanges, buy backs and new stock sales.
For a complete strategy to get your Pre Business Plan and Business Plan strategies in alignment and to better attract investors check out Report #1
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Venture Planning Associates,
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"When we received first round funding ($5 million) the VC firm asked us to show them how our financial models were created. They wanted to use OUR TEMPLATE (which we developed from the 7 Venture Capital Reports) to help them evaluate alternative scenarios for their portfolio companies!" Michael .Lay, CFO, e-Commerce Internet Company
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