Steve Marr.org

A recent study released by Carbonite found 48% of small business with less then 20 employees lost important data last year. Hardware failures accounted for over half the data loss along with accidental deletion. Viruses were cited by 33% of companies loosing data and theft of equipment caused 10% of the data losses.

We all have lost data or hit the delete key at the wrong time.  Today, we have many choices of back up from companies that can automatically back up our files, or systems that are easily installed in a home or office. The key point is to figure out a good back up system, and do it, now.

Some backup systems are automatic while others require a process initiation to capture the data. Cloud computing has developed as a great solutions, allowing access to files any place, any time.

A key to business diligence is developing an understanding of financial statements. Many small business owners just want to get the work done. They may relegate paper work and financial statements to the bottom of the pile. King Solomon wrote, "The precious possession of a man is diligence." (Proverbs 12:27, NASB) Understanding financial statements is a key to effective business diligence.

The Bureau of Labor Statistics reported the productivity rate fell during the second quarter of 2011 from .3% in the United States. Simply put, productivity measures the amount of output per hour worked. In any business, increased productivity is a good thing, while a drop is a bad thing.

Businesses gain productivity not just by cracking the whip and getting people to work harder. True productivity gains are based on investment in new equipment that makes workers more productive. The computer revolution is an excellent example, we can do so much more each day.

Improved productivity can also spring from improved work procedures and investment in training.

One business owner told me, “I don’t worry about my profit and loss statement, I just worry about my bank balance. If I have cash in the bank, great, if not, bad.” While this may be a simplistic perspective, cash flow may be more important then how much income you report. 

A critical part of any business is cash flow. Every business either generates cash or consumes cash. Business owners and managers need to understand every component of a business and how cash flow is affected.

One business owner was investing to build inventory. They were holding around $500,000 in inventory, very high for the business. The income statement showed a profit that year of $55,000.00, but the business experienced negative cash flow of over $200,000. They were literally running out of cash. I encouraged them to replace less inventory when sold, and over 6 months were able to increase cash by $150,000.00, enough to stay out of trouble.