Are you Financially Fit?

I know we’ve talked about this, but ARE YOU FINANCIALLY FIT?

By Al Lopez, March 19, 2013

Our initial session for EGBI’s small business startup training is Boot Camp. Many of you have taken it, and I know that many wonder why we are starting our “how to start a business” program with a class on personal finances and credit. However, it is surprising to me how many of the clients who begin our program have very little idea when it comes to their financial obligations, book-keeping and overall financial fitness. So we start with the basics and build on that. In fact, as we have refined our curriculum over the last two years, most of what we have embellished has been financial in nature – more detail on income statements, break-even, cash flow, pricing, and taxes.

Cash flow is critical – a business can be “profitable” and still go bankrupt. So, don’t get caught up looking at your income statement over a year and assume the cash will flow. It is critical to look at it monthly and sometimes, depending on payment cycles, even inside the month. Be prepared to navigate through those dips in available cash with savings, lines of credit, etc.

As a finance executive for most of my career, spending the last 11 years of it at Dell, Inc, where metrics and data were the only “truth,” I am pretty obsessed with looking at key measures. As a small business owner, you should measure everything: profitability, balance sheet, and cash-flow statements. In addition, there may be some measures that are unique to your business – identify them and track/measure those that are specific to your customers and product/service. As your business grows, make sure you evolve and expand your metrics so that you are able to understand the state of your business at all times. Those measures may be more operational in nature, but they will affect your financials. It is also important to review your performance and understand the indicators of the future of your business. Ask questions, be wary, and know what you are getting into. If there are areas that you are still uncomfortable with, get help. Don’t be too proud or take too long to “figure it out”.

Make sure you are financially fit at the personal and business level, and remember that EGBI is here to assist you. In fact, we are proud to be part of the Financial Fitness Greater Austin Week, which is coming up April 22-28, 2013.

Financial Fitness Greater Austin (FFGA) is an education and awareness initiative in partnership with the Alliance for Economic Inclusion, Senator Kirk Watson and more than 60 entities in the Greater Austin area. The goal of FFGA is to provide financial awareness and information to the Greater Austin community and emphasize the importance of financial literacy and the need for consumers to be proactive about managing their finances.

EGBI is a partner in the Adult Financial Fitness (FF) Contest, as part of the FFGA. This contest engages participants in actively managing their finances. Participants get to choose between a “CREDIT” or “BUDGET” packet that walks them thru four financial activities. After completing the activities, participants write an essay on how their “new financial knowledge” has made a difference in their lives. Packets are available at EGBI for pickup now thru April 12th (or downlaod them from the FFGA website). Check it out: 1st prize gets $500, 2nd prize gets $300, and 3rd prize gets $200. Join in and demonstrate your fitness! Please email for information and to request a package to participate.