Mike Ford’s Advice for Managing a New Business’ Financial Risk
Recently, Forbes asked PBO Advisory Group’s Managing Director & Founding Member Mike Ford for advice to business owners regarding financial management. Mike is a member of the Forbes Finance Council, a group of senior-level finance executives who write and comment on various issues.
Mike’s advice is:
“Make sure you have plenty of capital. Develop a financial pro forma that includes revenue and cost of goods/services assumptions. Ensure profit margins are within industry standards. Earnings before interest, taxes, depreciation, and amortization [EBITDA] should be 15% to 20% of revenue. Include a contingency for unexpected expenses. Complete a cash flow projection and obtain appropriate financing. Do not bootstrap a business — well-capitalized businesses are more likely to succeed and weather unexpected obstacles.”
See Mike’s comments on the Forbes website and get more tips from his colleagues on the Finance Council here.