Why Complete a Financial Stress Test?

Small business owners are often looking for ways to grow their business, increase sales, expand services, etc. But rapid growth comes at a cost, and without being properly prepared you could end up with a mess on your hands. By completing a financial stress test you can quickly and efficiently discover potential areas of struggle, as well as areas of strength in your business. Let’s look more closely at The CFO Source’s proprietary Financial Stress Test System.

Understanding Growth Demands

By completing our Financial Stress Test you’ll quickly be able to see how much capital is necessary for significant growth within your company. By analyzing your current expenses and income you’ll be able to see how much you can afford to grow in sales, inventory, and operating costs. A Financial Stress Test can also help you determine how much your company can afford to grow organically simply based on your profits, versus how much growth you can handle by borrowing money. By having a clear picture of what your business can afford, you can make wiser growth decisions for your company.

Finding Areas of Weakness

A thorough analysis of your business’ financial status can also show you areas of weakness in your business. Our Financial Stress Test System can show business owners the impact financial struggle would have on their business as it stands, and in the event of significant growth. Carefully analyzing your business’ debt to profit ratio can help you decide with confidence which areas to expand and which areas to reign in. Likewise, understanding the ins and outs of your companies operating costs can help you determine if things need to be eliminated or expanded.

Should your business’ sales or profitability significantly decline for some unforeseen reason, you may not feel equipped to deal with it and make wise financial decisions. But if you have analyzed your business’ financial shortcomings ahead of time, you can make adjustments to help you prepare for the unforeseen.

By having a clear picture of your business’ financial state, as well as some potential scenarios based on growth or decline, you can plan for the future of your business with confidence. By working with an experienced business financial consultant and taking our proprietary Financial Stress Test, you can confidently steer your company in the direction of growth. To discuss how we can help you take your business to the next level, call us at The CFO Source today!