Business finance analysis

Time is money.While most business owners are quick to realize just how valuable every moment of their time is, many business owners fail to commit the needed amount of time to analyzing their business's finances.This is due in part to the fact that the monetary benefits of doing so are not always immediately apparent.But as most of us know, time and money are directly related.It is essential to commit time not only to making money but also to managing money.When we take time to forecast financially we are really making better informed decision regarding the actions that we anticipate making.

Indecision and delays are often the result of not having knowledge of how to perform an analysis of one's business finances.It is a combination of these delays and failure to make changes when changes are needed that lead to failure.Managers would do well to remember the importance of anticipating, and hence a better job of managing uncertainty, by using effective forecasting and other predictive techniques that are integral parts of business finance analysis.

When doing business finance analysis, you as the business owner are taking on the role of a business analyst.By definition, a business analyst is skilled at working with end-users to determine what their needs are.This is of vital importance to finance because without knowledge of what the customer wants, you cannot produce what the customer needs and therefore there will be no source of income. The biggest part of financial analysis involves delving into the financial statements. This process is also known as quantitative analysis.This involves looking at revenue, expenses, assets, liabilities and all the other financial aspects of a company.Financial analysts look at this information to gain insight on a company's future performance. A good place to start educating yourself on business finance analysis is to start learning about the balance sheet, income statement, cash flow statement and how they all fit together.Often, the business analyst has some technical experience which is useful in determining the financial feasibility of the customer's requests.But many times in a small business operation this technical training can be substituted for common sense solutions and basic mathematical computations to determine whether or not filling a certain request would be worth the money.Along these same lines is the principle that analyzing the financial health of a company is not all about crunching numbers.Qualitative analysis is a form of analysis that aims to break down and measure the more difficult to measure characteristics of a company. Both a quantitative (numbers and statistics) and a qualitative (measurement of the intangible) are necessary in order to achieve a balanced view of how the company is actually performing.

Business finance analysis can involve some more technical aspects of business management that go beyond basic bookkeeping.For example, in the role of business analysis, it is the individual's responsibility to translate what the customer is asking for into a technical form that can then be analyzed further by the company's business finance software program.There are hundreds of different ways to perform a business finance analysis.Add to that the different actions that can be taken as a result of the analysis performed and you can begin to see why competitors in the market place may be selling similar products but have very different operating plans, financial management strategies and investment portfolios.Running your own business may start with an idea for a product that you think that you can make money on, but eventually the task of running a business is going to have to include operational strategies like business finance analysis.