Crunching the Numbers. Boomtown: Think Like a Startup

Your passion may have led you into business, but tracking cash flow and other key numbers will help keep your company up and running.

This is an excerpt from an original article in the American Express Open Forum here.

Written by DARREN DAHL

Passion drives some people to start a business: They love to make or do something so much they want to turn it into a living. But starting a small company based on a passion and managing the dollars and cents needed to make it a success are two different things.

“Small-business people we work with tell us all the time that they have no idea about anything to do with the numbers.”

…says Matt Fargo, a partner at Boulder, Colorado accounting firm Kurtz Fargo LLP and a mentor expert at the Boulder-based Boomtown startup accelerator. If you want to run a successful company, though, you can’t ignore the numbers.

Regardless of what kind of company it is, you have to generate enough cash to buy supplies, pay for other expenses, and if you have employees, meet payroll and associated labor costs. That means maintaining a positive cash flow, consistently bringing in more revenue from sales than what’s going out for expenses.

“Cash flow is the lifeblood of small business,” – Matt Fargo, Kurtz Fargo LLP

In addition to cash flow, companies use other sources of information to determine how well they’re doing, including income statements, equity, debt and balance sheets. Small businesses can track how they’re doing by following key performance indicators (KPIs) such as inventory turns, or the number of times inventory is sold or used in a month, year or other time period.

Continue reading the original article here.

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