General Requirements (takes about 5-minutes or less to apply online)
680+ FICO score (FICO model 8.0 or similar)
Less than 15% operating loss in the last year of business
Last 2-Years of filed Business Tax Returns; Last 1-Year of filed Personal Tax Returns
Last 3-months of bank statements; copy of Driver’s License
Beyond the Balance Sheet:
Advanced Business Financial Strategy
As a small business owner, you are the master of your craft.
You understand your customers, your product, and your market inside and out.
But what about the numbers?
For many entrepreneurs, the financial side of the business can feel like a necessary evil—a labyrinth of spreadsheets, tax forms, and accounting jargon that exists primarily to satisfy the bank and the IRS.
The balance sheet, the income statement… these are often viewed as historical records, a rearview mirror look at where you’ve been.
This perspective, while common, is dangerously limiting.
Your financial data is not just a record of the past; it is the most powerful tool you have for shaping the future.
It’s a compass, a blueprint, and a strategic weapon all rolled into one.
To truly scale your business, to build lasting resilience, and to move from simply surviving to strategically thriving, you must learn to look beyond the basic balance sheet.
This means graduating from reactive bookkeeping to proactive financial strategy.
It’s about asking not just "What did we make?"
but "What do these numbers tell us about our next best move?"
This shift in mindset is the single most impactful transition a leader can make.
It’s the difference between being a passenger in your own business and firmly gripping the steering wheel, ready to navigate whatever lies ahead.
The Business Health Trinity:
More Than Just Reports
Most business owners are familiar with the "big three" financial statements: the Income Statement, the Balance Sheet, and the Statement of Cash Flows.
But familiarity often breeds contempt, or at least, indifference.
We see them as compliance documents, not strategic guides.
To unlock their power, you must view them as an interconnected "Business Health Trinity," each telling a unique but essential part of your company's story.
The Income Statement, often called the Profit and Loss (P&L), tells the story of your profitability over a period of time.
It answers the fundamental question: "Are our core operations making money?"
It’s your narrative of revenue, costs, and ultimately, profit.
But a strategic leader looks deeper.
Where are your margins strongest?
Are your Cost of Goods Sold (COGS) creeping up?
Is a particular service line disproportionately contributing to your net income?
The P&L isn’t just a score; it’s a diagnostic tool that highlights what parts of your business engine are firing efficiently and which are sputtering.
The Balance Sheet tells the story of your financial stability at a single point in time.
It answers the question: "What is the fundamental structure of our business?"
It's a snapshot of what you own (Assets) and what you owe (Liabilities), with the difference being your Equity.
A novice sees a list of assets and debts.
A strategist sees the company's foundation.
Is your debt load manageable relative to your equity?
Are your assets liquid enough to cover short-term liabilities?
A strong balance sheet provides the stability to weather unexpected storms and the leverage to seize opportunities.
It's the bedrock upon which all growth is built.
The Statement of Cash Flows tells the story of your liquidity.
It is arguably the most critical, most misunderstood and rarely used of the three.
It answers the question: "Where did our cash come from, and where did it go?"
This statement reconciles the accrual-based profit from your Income Statement with the actual cash in your bank account.
It’s the ultimate truth-teller in business, revealing the real-world flow of money.
A business can be wildly profitable on paper but careen into bankruptcy because it has no cash.
Understanding this statement is non-negotiable for strategic leadership.
The Profit Illusion:
Why Cash Flow is King
"But my P&L says I'm profitable! Where did all the money go?"
This is one of the most common and painful cries of a growing small business.
You can have record sales, impressive profit margins, and a beautiful income statement, yet find yourself unable to make payroll.
This is the profit illusion, and understanding the distinction between profit and cash flow is the first major leap into advanced financial strategy.
Profit is an accounting concept.
It includes non-cash expenses like depreciation and recognizes revenue when it’s earned, not necessarily when it’s received (accounts receivable).
Cash, on the other hand, is the oxygen your business breathes.
It’s the money in the bank that pays your suppliers, your employees, your rent, and your taxes.
You can't pay a vendor with accounts receivable.
You can't fund an expansion with net income. You need cold, hard cash.
This is why the Statement of Cash Flows is your most trusted advisor.
It breaks down your cash movements into three areas: operations, investing, and financing.
Is your core business (operations) generating cash, or is it consuming it?
Are you spending cash on new equipment (investing) to fuel future growth?
Are you taking on new loans or paying down old ones (financing)?
A healthy company consistently generates positive cash flow from its operations.
This operational cash flow is the engine that can then be used to invest in growth, pay down debt, or build a safety net.
Focusing solely on profit while ignoring cash flow is like admiring the speed of a car while ignoring its fuel gauge. Eventually, you’ll find yourself stranded on the side of the road.
Your Business's Dashboard:
Mastering Key Performance Indicators
If the three financial statements are the detailed instruction manual for your business, then Key Performance Indicators (KPIs) are the dashboard.
You don’t need to read the entire manual every time you drive, but you do need to glance at your speed, fuel, and engine temperature.
KPIs are the specific, measurable metrics that give you a real-time pulse on the health and performance of your business.
The key is to move beyond vanity metrics (like website visits) and focus on the numbers that truly drive strategic decisions.
It’s helpful to think of KPIs in two categories: lagging and leading indicators.
Lagging indicators, like last quarter's revenue or net profit, tell you about past performance. They are essential for confirming your strategy is working, but they don't help you predict the future.
Leading indicators, on the other hand, are predictive. They give you a clue about future results.
Think of things like the number of qualified sales leads in your pipeline, your website conversion rate, or your customer satisfaction scores.
A sudden drop in leading indicators is an early warning system that your lagging indicators (like future revenue) are about to take a hit, giving you time to course-correct.
Some of the most powerful KPIs for a small business include:
● Gross Profit Margin: This shows the profitability of your core product or service before overheads. A declining gross margin is a major red flag.
● Customer Acquisition Cost (CAC): How much does it cost you in sales and marketing to acquire one new customer?
● Customer Lifetime Value (LTV): How much total profit can you expect to make from an average customer over the entire course of their relationship with you? A healthy business model requires an LTV that is significantly higher than its CAC.
● Days Sales Outstanding (DSO): On average, how many days does it take for you to collect payment after a sale is made? A high DSO can be a major drain on your cash flow.
Choosing a handful of the right KPIs and tracking them obsessively transforms you from a reactive manager into a proactive leader.
Financial Forecasting:
Your Business's Crystal Ball
While financial statements look backward, financial forecasting looks forward.
It is the process of using your historical data and your knowledge of the market to project your future financial performance.
This is not about having a perfect, magical crystal ball.
It’s about creating a well-reasoned, data-driven hypothesis about where your business is heading.
It’s one of the most powerful strategic exercises you can undertake.
Many business owners confuse forecasting with budgeting.
A budget is often a static, rigid plan created once a year—a set of targets you try to hit.
A forecast, by contrast, is a living, breathing document.
It’s a rolling projection, typically looking ahead for the next year or more, that you update regularly (perhaps monthly or quarterly) as new information becomes available.
The process usually starts with a sales forecast.
Based on your pipeline, seasonality, market trends, and planned marketing initiatives, what do you realistically expect your revenue to be?
From there, you build out your expense forecast.
What are your fixed costs?
What are your variable costs tied to that sales forecast?
The result is a projected P&L and, critically, a projected cash flow statement.
Why is this so powerful?
A forecast allows you to see the future before it happens.
It can reveal a potential cash crunch six months from now, giving you ample time to secure a line of credit or adjust your spending.
It can show you the financial impact of hiring a new employee or investing in a new piece of equipment, allowing you to make the decision with your eyes wide open.
It turns your strategic goals into concrete financial targets and provides a roadmap to get there.
Strategic Scenario Planning:
Preparing for the What-Ifs
The world is uncertain.
A key supplier could go out of business.
A new competitor could enter the market.
A global pandemic could upend your entire industry.
A robust financial forecast is your baseline, your "most likely" path.
Strategic scenario planning is the process of building on that forecast to prepare for other possibilities.
It's a financial fire drill for your business.
The practice is straightforward but profoundly insightful. You create several versions of your financial forecast based on different potential scenarios. Typically, you’ll want to model at least three:
● A Best-Case Scenario: What if that huge new contract you're bidding on comes through? What if your new marketing campaign is twice as effective as you hoped? How would that impact your revenue, costs, and cash needs? This helps you prepare for the challenges of rapid growth, like needing to hire quickly or secure more inventory.
● A Worst-Case Scenario: What if you lose your biggest client? What if a recession causes your sales to drop by a third? What if your material costs spike? This is not about fear-mongering; it's about resilience. This model will show you exactly where your breaking points are. How long could your business survive? What costs would you need to cut first? It forces you to build a contingency plan before the crisis hits.
● A Most-Likely Scenario: This is your baseline forecast, your most realistic projection of the future.
By running through these exercises, you remove the element of panic from decision-making.
When an unexpected event occurs—good or bad—you've already thought through the financial implications.
You have a playbook ready.
This proactive stance is a hallmark of advanced financial leadership and can be the difference between a business that folds under pressure and one that adapts and emerges even stronger.
The Art of Capital Allocation:
Putting Your Money to Work
Once your business is consistently generating positive cash flow from its operations, you are faced with one of the most important questions a leader can ask: "What is the best use of this capital?"
This decision-making process is called capital allocation, and it is the primary driver of long-term value creation.
Simply letting cash pile up in a checking account is often a poor strategic choice due to inflation and missed opportunities.
Your job is to put that money to work in the most intelligent way possible.
You generally have four primary options for allocating capital:
● Reinvest in the Business: This is often the highest-return option for a growing company. This capital can be used to purchase new, more efficient equipment, fund research and development for a new product, launch a major marketing campaign to expand your market share, or hire top talent to improve your operations. The key is to invest in projects where the expected return on investment (ROI) is high.
● Pay Down Debt: Reducing your liabilities strengthens your balance sheet, reduces interest expenses (which boosts future profits), and decreases your company's overall risk profile. Prioritizing high-interest debt, like credit card balances, is almost always a smart financial move.
● Build a Cash Reserve: Every business needs a safety net. Building a healthy cash reserve (often recommended as three to six months' worth of operating expenses) provides immense strategic flexibility. It allows you to weather unexpected downturns without desperation, and it gives you the "dry powder" to seize opportunities—like acquiring a struggling competitor or buying inventory at a discount—when others cannot.
● Take Distributions: As the owner, you deserve to be rewarded for your risk and hard work. Taking profits out of the business in the form of dividends or distributions is a valid use of capital.
The art is in balancing these choices.
A financially savvy leader doesn't just make these decisions on gut feeling.
They model the potential returns of each option.
Should you pay down a 7% business loan or invest in a marketing campaign projected to deliver a 20% return?
The answer lies in the numbers.
General Requirements (takes about 5-minutes or less to apply online)
680+ FICO score (FICO model 8.0 or similar)
Less than 15% operating loss in the last year of business
Last 2-Years of filed Business Tax Returns; Last 1-Year of filed Personal Tax Returns
Last 3-months of bank statements; copy of Driver’s License
Leveraging a Double-Edged Sword:
Strategic Debt Management
Debt has a bad reputation in personal finance, and that caution often carries over into the business world.
While irresponsible debt can certainly cripple a company, a blanket aversion to all debt is strategically naive.
For a growing business, debt is a tool—a powerful, double-edged sword that can either build your empire or tear it down, depending on how you wield it.
The key is to distinguish between "good debt" and "bad debt."
Good debt is debt taken on to purchase an asset that will generate more value or revenue than the cost of the debt itself. For example, taking out a loan to buy a new machine that increases your production capacity and profitability is good debt. Using a line of credit to purchase bulk inventory at a steep discount, which you can then sell for a significant profit, is good debt. This is leverage; you are using other people's money to generate a higher return for your own business.
Bad debt is debt taken on to cover operating shortfalls or to purchase non-productive assets. Using high-interest credit cards to make payroll because of poor cash flow management is bad debt. Financing expensive office furniture that adds no real value to your product or service is bad debt. This type of debt digs you into a hole, with interest payments draining your future cash flow without contributing to growth.
A strategic approach to debt involves understanding your capacity for it.
Metrics like the Debt-to-Equity Ratio (Total Liabilities / Shareholder Equity) can help you gauge your level of leverage.
You must also rigorously analyze the terms of any loan—the interest rate, especially the repayment period, and any covenants or restrictions.
Used wisely, debt can be the fuel that accelerates your growth far beyond what you could achieve with your own capital alone.
Your Financial Co-Pilot:
Leveraging Technology for Deeper Insights
Not long ago, sophisticated financial analysis was the exclusive domain of large corporations with teams of accountants.
Today, a revolution in cloud-based software has put institutional-grade financial tools into the hands of every small business owner.
Trying to manage your business's financial strategy using outdated desktop software or a tangle of disconnected spreadsheets is like trying to navigate a new city with a paper map from a decade ago.
It’s possible, but it’s inefficient, prone to errors, and you’ll miss what’s happening in real-time.
Modern financial technology, or "FinTech," can act as your dedicated co-pilot, automating tedious tasks and serving up critical insights on demand.
The modern financial stack for a small business typically includes:
● Cloud Accounting Software: Platforms like QuickBooks Online, Xero, or FreshBooks are the foundation. They connect directly to your bank accounts, automating transaction categorization and providing a real-time view of your financial statements.
● KPI Dashboard Tools: Services like Geckoboard, Databox, or Google Looker Studio can plug directly into your accounting software, CRM, and other data sources. They automatically calculate your most important KPIs and display them in a simple, visual dashboard that you can check daily. This eliminates the need for manual spreadsheet updates.
● Expense Management and Bill Pay Systems: Tools like Ramp, Brex, or Bill.com streamline the entire process of employee expense reporting and paying supplier invoices. They provide better control over spending, reduce manual data entry, and often integrate seamlessly with your accounting system.
Embracing this technology is not about replacing your financial judgment; it’s about augmenting it.
By automating the data gathering and calculation, you free up your most valuable resource—your time and mental energy—to focus on what truly matters: interpreting the data, asking strategic questions, and making smarter, faster decisions for your business.
Building a Financially Fluent Business:
From Numbers to Narrative
Moving beyond the balance sheet is ultimately a journey from seeing numbers as a chore to understanding them as a story.
Your financial data is the narrative of your business—its past struggles, its present condition, and its future potential.
Learning to read and interpret this story is the most critical skill for any business leader who aspires to build something truly enduring.
This isn't a transition that happens overnight.
It begins with small, consistent steps.
Start by choosing just three or four KPIs that are most relevant to your business and commit to tracking them weekly.
Take the time to build your first simple, rolling cash flow forecast. Run one "worst-case" scenario to understand your vulnerabilities. Each of these actions builds your financial muscle and fluency.
Furthermore, this cannot be a solo endeavor.
A financially fluent business has a culture of financial awareness.
This doesn’t mean sharing sensitive salary information with everyone, but it does mean helping your team understand the "why" behind your decisions.
When your head of sales understands the impact of Days Sales Outstanding (DSO) on the company's cash, they become more motivated to help collect on overdue invoices.
When your operations manager understands the Gross Profit Margin on a product, they are empowered to find efficiencies in the production process.
When your team understands the connection between their work and the financial health of the company, they become more engaged and effective partners in its success.
Your expertise in your craft got you started.
But it is your mastery of financial strategy that will determine your legacy.
Look beyond the columns of debits and credits.
See the trends, ask the hard questions, and listen to the story your numbers are desperately trying to tell you. It's the story of your future.
Yours in Business Finance and Strategy Advice,
BERNARSKY ADVISORS
WHAT IS THE BEST AND SAFEST WAY FOR YOUR BUSINESS TO DEAL WITH HIGH BUSINESS DEBT PAYMENTS?
It is NOT by stopping ACH payments.
It is NOT by taking on another business loan.
It is NOT ALWAYS a Refinancing
It is NOT by entering into a debt settlement program.
Find out the BEST strategies to get your Business back to where it was
Setup a meeting with a business finance & strategy expert to discuss all of your options!
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