A small business’ financial position has the potential to be either strong or weak. Of course each business owner would prefer to be in the first category, however to achieve this there must be solid strategies in place.

In this segment of an interview between Dale Beaumont and Matthew Nolan discover six key factors that define a company being in a strong financial position. Matthew is the founder and managing director of Provident Inventory Finance. As a sought-after business advisor and finance industry commentator, Matthew has regular columns in over a dozen business magazines and newspapers, advising on issues such as cash flow management, business planning and diversification.

In your opinion, what are the key factors that define a company that is in a strong financial position?

As a lender, my company assesses thousands of businesses every year and from that experience there are six key measures that can be used to indicate a typical company in a strong financial position.

• Net Equity – the level of tangible assets in excess of liabilities is the single most important measure of a company’s financial position. This is because it indicates the owner’s investment in the business and the growth of that investment.
• Debt Levels – this should be measured relatively to the net equity in the business. It’s a key factor because if your business experiences a downturn, you may need to borrow additional funds that won’t be available if the business is already highly geared.
• Working Capital – a business needs available cash to pay its expenses and the level of working capital is a good indicator of this ability. This should be considered in conjunction with the number of days it takes customers to pay and how long suppliers give the business to pay for its purchases.
• Gross Profit Margins – if this indicator is strong relative to industry standards, it shows that sufficient margins can be maintained if competitive pressures increase.
• Profitability – businesses that generate consistent profits, providing suitably high returns for the equity invested, are typically well regarded.
• Stock Turnover – if a company can turn its stock over quickly, relative to others in similar industries, it will make its gross profit margin in a shorter period of time, have lower stock holding costs and less risk of its stock becoming obsolete.

There are many other measures of a business that are relevant to their specific areas of focus, but these provide a balanced, high-level view of a business and its overall strength.

For more of this interview and small business financials check out “Secrets of Top Business Builders Exposed!“

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If you have decided to start a business in Australia, there are some key factors to business growth that are a must for you to come by. It is important to know how to strategise for success from the beginning. Find these four key factors in this snapshot from an interview between Dale Beaumont and Matthew Nolan.

Matthew is the founder and managing director of Provident Inventory Finance. As a sought-after business advisor and finance industry commentator, Matthew has regular columns in over a dozen business magazines and newspapers, advising on issues such as cash flow management, business planning and diversification.

You now manage one of the fastest growing finance companies in Australia. What were the key ingredients to your rapid business growth?

We are currently growing at 310 per cent per annum and this has been achieved through four key factors:

• Having a clear vision for the growth of our company and following that through with strong leadership to guide the team in executing that strategy.
• Hiring great people to undertake the implementation of that growth strategy, especially in the sales and marketing teams.
• Diversifying our sales strategy rather than relying on a single source of client referrals. We set about seeking referrals from a wide variety of sources, such as accountants, commercial finance brokers, mortgage brokers, solicitors and even banks!
• Delivering a great product, but still undertaking continual innovation based on feedback from our clients. This has led to innovations such as the addition of funding for freight costs and customs charges.

Referrals have played a big part in our rapid growth. As existing customers achieve increased profits from using our product, a significant new source of customers has emerged from word-of-mouth referrals. Happy customers are our greatest advertisement!

For more of this interview and how to start a business in Australia, check out “Secrets of Top Business Builders Exposed!“

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If you are wanting to start a small business, it is never too early to begin planning for potential growth. As a small business owner you must continually have a big picture perspective. Find out the most important things to know about growing a business in this excerpt from an interview between Dale Beaumont and Matthew Nolan.

Matthew is the founder and managing director of Provident Inventory Finance. As a sought-after business advisor and finance industry commentator, Matthew has regular columns in over a dozen business magazines and newspapers, advising on issues such as cash flow management, business planning and diversification.

What are the most important things for growing a business?

After watching thousands of successful businesses grow, it is clear that there are common keys to their successes.

• Plan for growth – this involves working out how your business can expand and what will be needed to achieve this in terms of resources, such as staff and working capital. Developmental tools, such as a business plan and a budget, can provide a road map for your business’s expansion and are vital for keeping growth ambitions realistic and on track.
• Think laterally about growth options – leave behind statements such as, ‘We don’t do that here’ or ‘We can’t because…’ Business managers and owners frequently set artificial boundaries around their business that bear no resemblance to its true potential. Successful growing businesses focus their thinking on new markets or products, and finding alternative ways to grow their capacity, such as new machinery or accessing alternate sources of working capital.
• Follow plans through – have the tenacity to see a growth strategy through, especially when at first it doesn’t succeed. Sure, it may need some tinkering to achieve success, but it’s important not to give in to the temptation to prematurely scrap a push toward growth altogether.

For more of this interview and what to know about starting a business, check out “Secrets of Top Business Builders Exposed!“

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