What makes a company financially viable

The most basic factor of increased productivity and efficiency is speed. Equipping your staff with the most efficiently run software and hardware should be high on your list. Invest in a good CRM system. The focus that this can bring to sales and marketing teams means that more effort is expended on those prospects that have the highest propensity to purchase. This will reduce wasted time and money. Consider moving some of your business administration into the cloud. Cloud-based accounting packages can enable easier measurement of key figures.

You will save space on server storage, and it will reduce the risk of system failure and information loss. And allowing your employees to securely access important documentation from anywhere will further enhance productivity. Make sure your staff have the tools they need to be able to work remotely and while on the move.

Technology systems that enable them to have remote access to company internal systems and databases will allow your field staff to be better equipped. This will further improve productivity and efficiency. Turnover is vanity, profit is sanity, and cash flow is reality.

Your cash conversion cycle — the process by which you turn stock into cash — needs to be optimised for your business. In other words, you need to be getting cash flowing into your business as efficiently as possible. Analyse every part of your cash inflow journey. Relax, and remember that determining viability is just the start.

After this, the real learning and validation begins! He has a background in leading and building technology and telecom start-ups in Vancouver, as well as international roles with Hewlett Packard Financial Services. He applies his diverse and extensive business experience to help clients successfully plan and grow their business. Note: you can withdraw your consent at any time - for more information see our Privacy Policy or Contact Us for more details.

How will you know whether people will buy your product or service? What is a competitor, and how do I compete with them? Rod Nuttall from the CBA discusses financial strategies to maximise return on investment. On face value, buying a franchise can seem like a sure way of taking charge of your financial future and earning a healthy profit, with the added bonus of becoming your own boss.

Proven business models, established brand names, popular products and access to training programs form a comprehensive framework which can leave potential franchisees asking — How could I go wrong? While the framework often provides great assistance for owners to maximise their initial investment, there are a number of key factors that must be considered to ensure a franchise operation takes full advantage of the selected business model, and eventually turns in a healthy profit for its owners.

Some of these include:. Taking the time to understand the franchise system is crucial. Franchisees must be honest and realistic in assessing opportunities and make sure that they select a system that suits their lifestyle and aligns with their interests.

A key risk for any franchisee when entering into a franchise agreement is the depth of understanding they have of the business they are considering investing their capital into. The franchisee should not only seek information from the prospective franchisor but also from reliable independent sources for both advice and information. DC Strategy Research, a specialist research firm focused on providing quality business analysis for key decision makers, has undertaken a venture whereby they are constructing well researched independent business reports on individual franchise systems.

These reports will allow prospective franchisees to more easily identify the highest quality franchise systems in Australia. As a result, those prospective franchisees now have a trusted and independent source of information to help them make a fully informed decision about which franchise to purchase.

This includes:. Use business check-up ratios to measure the health of your business. Business viability is often confused with two other terms that are often used for business performance—solvency and liquidity. A business is solvent when it has enough assets to cover its liabilities. Solvency is often confused with liquidity, but it's not the same thing. Solvency is often measured as a current ratio , which is a business's total current assets divided by its total current liabilities.

A business should have a current ratio of to be solvent and cover liabilities, which means that it has twice as many current assets as it has current liabilities. You need twice as many assets as liabilities because selling assets to raise cash may result in losses. A business is solvent and not likely to declare bankruptcy if its current ratio is over Liquidity is more of a short-term measure.

It refers to the ability of a business to quickly turn assets into cash without loss. If your business needs money, you may have to sell assets. Unless the asset is cash, the most liquid asset of all, you may lose money by selling. For example, you may not get full value if you sell receivables.

If you try to sell equipment, you will probably take a loss because the equipment has most likely depreciated.