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When doing business, the No.1 question you want to know is: Is my business viable and profitable? To answer this question, there are four main areas of financial health you should look at to accurately evaluate the financial health and long-term sustainability of your company. They are: liquidity, solvency, profitability and operating efficiency.

Liquidity is a key factor in assessing a company’s basic financial health. Liquidity is the amount of cash and easily-convertible-to-cash assets a company owns to manage its short-term debt obligations.

The quick ratio, also sometimes referred to as the acid test, is one of the most common metrics used to measure liquidity.

Quick Ratio = Liquid Assets / Current Liabilities, or
Quick Ratio = (Cash and Equivalents + Marketable Securities + Accounts Receivable) / Current Liabilities

A figure of 1 is considered to be the normal quick ratio, as it indicates that the company is fully equipped with sufficient assets that can be instantly liquidated to pay off its current liabilities. A company that has a quick ratio of less than 1 may not be able to fully pay off its current liabilities in the short term, while a company having a quick ratio higher than 1 can instantly get rid of its current liabilities.

Solvency is a company’s ability to meet its debt obligations on an ongoing basis, not just over the short term.

The debt-to-equity (D/E) ratio is generally a solid indicator of a company’s long-term sustainability

A lower D/E ratio means more of a company’s operations are being financed by shareholders rather than by creditors. This is a plus for a company since shareholders do not charge interest on the financing they provide. Regardless of the specific nature of a business, a downward trend over time in the D/E ratio is a good indicator a company is on increasingly solid financial ground.

A company’s operating efficiency is key to its financial success. Its operating margin is the best indicator of its operating efficiency. It shows the proportion of revenues that are available to cover non-operating costs like paying interest — which is why investors and lenders pay close attention to it. Highly variable operating margins are a prime indicator of business risk.

Operating Profit Margin = Operating Income / Sales Revenue

Operating income is often called earnings before interest and taxes (EBIT)

Operating Income (EBIT) = Gross Income – (Operating Expenses + Depreciation & Amortization)

While liquidity, basic solvency and operating efficiency are all important factors to consider in evaluating a company, the bottom line remains a company’s bottom line: its net profitability. The best metric for evaluating profitability is net margin, the ratio of profits to total revenues. It is crucial to consider the net margin ratio because a simple dollar figure of profit is inadequate to assess the company’s financial health.

For example, a 56% profit margin indicates the company earns 56 cents in profit for every dollar it collects. A larger net margin, especially as compared to industry peers, means a greater margin of financial safety, and also indicates a company is in a better financial position to commit capital to growth and expansion.

Want to know more about your company’s financial health or want to increase profitability and grow your business? Start a free consultation with Ingredior now!

July was Ingredior’s FIRST Birthday and we celebrated in style, at Fox in a Box, Brisbane.
If you’re not familiar with this excellent business, Fox in a Box is the most well-known escape room company in Europe, and lucky for all of us, they’ve recently opened in Brisbane.

If you’re not familiar with an “escape room” the experience can be used as a team-building exercise or fun event with friends, and basically entails being locked up with a small group and solving some sort of faux dramatic problem before you are set free.

Ingredior tried our hand at the Prison Break room and curing the Zombie Apocalypse room and we’re pleased to report no member was left behind. All staff are free from their cells and the Zombies DID NOT take over the earth. **PHEW**

By our account, Fox in Box Brisbane was amazing – extremely attentive, with a high level of customer service. You can check them out here:  https://foxinaboxbrisbane.com/

It was very important to us that we celebrated our first year of business with a BANG, just as you would your child turning 1. The first 12 months brings with it, just like a newborn, the typical behaviours like sleepless nights, establishing a new routine, retaining balance, leading and learning…etc…

As a business, Ingredior has learned some lessons in the last 12 months, but we have had some amazing wins too and the biggest win of all… OUR TEAM!

Those who felt they did not fit the new environment self-elected out, which is the best any business owner or manager can hope for. Those who were keen to see where we were going decided to remain. We gained new highly-experienced, skilled staff which has taken Ingredior from FIT to STRONG. Our team are some of the most dedicated, kind, accepting and accommodating people we’ve ever met and we know you will feel the same once you get to know them!

To you, our clients and community, we are genuinely humbled by your support and trust in us and are grateful to you for granting us the opportunity to help your business reach new heights. We hope you continue to gain value from all the things we do… but we will say… STAY TUNED, because there is SOOOOO much more coming in the next 12 months.

THANKYOU. Thank you for your support, thank you to our team, thank you for the last 12 awesome months and CHEERS to turning 2!

HINT: Pay particular attention to number 4. We’ve included a list of things we do differently in relation to this at Ingredior – don’t miss it.

Let’s get one misconception off the table first – accounting and bookkeeping are not the same thing.

While bookkeeping records the financial transactions of the business, accounting goes well beyond this scope – not only allowing for better management of cash flow within the business but facilitating its entire financial operations and strategic planning.

In a business, particularly in their first few years of running, it is crucial to be as productive as possible. One of the ways this is achieved is through a dependable accounting process that addresses all processes efficiently.

Here’s why your business needs accounting activity, even if you feel like you’re surviving fine with bookkeeping alone.

Here at Ingredior, our unique approach harnesses the four pillars of business success to open up opportunities for your business growth. Namely:

1. Strategic Finance
2. Strategic Marketing
3. Strategic Business Development and
4. Business Strategy

You can learn more from our capability statement.

If you’d like to have a chat to us about how efficient accounting could be productive for your business, contact us for a FREE obligation-free consultation today.

Finding the right finance options for your growing business can be a stressful scenario, but this article will give you a good insight into where to start.

Featuring 7 Types of Finance you might consider for your business evolution, we outline which types of finance suits whom and the considerations you could make before deciding on the right one for you.

Because (sadly) money trees aren’t actually a thing, your decision to expand your business will usually require some form of finance.

There are several ways you can go about raising the funds you need to make your business expansion dreams a reality, and this article covers off on 7 types of finance you should consider if scaling up your enterprise is on the cards.

While funding a business expansion or even start up via “love money” is a real option like in the case of Jeff Bezos, it is also one fraught with peril. For many, the old adage of “don’t mix business with pleasure” could apply here and oftentimes it is better to leave your relationships and friendships outside the sphere of your working life to protect the relationship and not muddy the waters with loans or expectations.

Finding the right form of business funding for you will be a personal solution, balanced on a number of variables unique to your business and you.

There are no ‘one-sized fits all’ approach and it pays to do your research thoroughly before deciding on the type of funding that fits.

If you find this world a little overwhelming and do not know where to start, reach out to us for a chat, we’re always happy to explain these options to you further or steer you in the right direction.

*Ingredior is not a financial planner, broker or institution. Information provided in this article should not be considered legal advice, we recommend speaking with your lawyer (or seeking one out) and your accountant before making any decisions on your business and personal circumstances.

We recently had the privilege of an up close and personal with Sir Richard Branson.

He is a name so many people know. His achievements are up there with the likes of Tesla (the inventor, not the brand), of whom Sir Richard admitted he has admiration for.

One of Sir Richard’s passions is environmental sustainability. Interestingly, the principal he discussed – we believe – can also be used in business, so here is a ‘business take’ on the ripple effect.

The question was asking, how could a person start to make a difference when it comes to finding, or promoting, a solution to what is considered a local, national or global challenge.

Whilst Sir Richard was discussing his ‘ripple effect’ model in relation to environmental measures to reduce the global human-impact on our earth, over time with our clients we certainly use this ripple effect model as a way to help the business take a step back and look at the network available to them.

We’re excited for further discussion with him and his team on behalf of one of our clients ?!

If you’re still in business right now, you’ve likely survived some tough economic times, possibly even a share market crash and, depending on your birthday, potentially even a bona fide recession.

Chances are you know what to do to survive.

But are you thriving?

Success is something we all want, and we all deserve, but there’s no shame in admitting that, in order to firmly grasp it, we might need a little bit of help.

Money we usually don’t have enough of, networks are the same and connections take time and dedication to foster. As for structure, it’s normal for our day-to-day operations to cause things to get a bit too rigid and resourcing priorities can often be pushed to the back of the pile behind the demands of our core business activities.

Quite often, we know what we need to do to aim up and accelerate our growth, but we don’t know exactly how to do it, or when.

But while you wait, we’d love to give you 6 Top Tips to get you on the right path to thriving so you can start today!

Ingredior has created the ultimate way for you to Thrive & Succeed, a self-managed initiative, or with support, to help you navigate the minefield of finance, partnerships and marketing.

Thrive & Succeed will help you and your business to:

• Redefine goals.
• Take stock of your finances
• Shine a spotlight on marketing and
• Hone your strategies.

It includes a series of activities of the coming 6 months to support you along your growth and expansion journey.

We are proud to offer you our FREE Thrive & Succeed Download to get you started. You can get access to it via our website here.

Businesses are always looking for methods to expand and grow, and diversification is one approach that is worth giving some thought to.

Diversification is all about gently pivoting without damaging current revenue stream by building new products, exploring new markets and taking risks.

Most multinational companies already operate in more than two industries and it has been proven that diversification can certainly add value (and dollars) to a business.

If what you are doing in your core business setting is working to your liking, it can pay to broaden your business horizons by deploying diversification planning and strategy, while applying calculated risks.

When considering diversification within your own business it could pay to do some research into company’s who have done so successfully in the past.

2008 was the last time a severe recession hit the world, what did businesses do at that time to keep going? What success stories can you find?

One well-known company who have nailed their diversification game is one you’ve likely heard of – Disney.

Credit: wolterke – stock.adobe.com

Back in 1928 when Disney released its first cartoon there was little indication the company would become the unstoppable giant it is today, but it has moved to where it is through measured and consistent diversification strategy.

One year after that first cartoon came out Disney licensed a pencil tablet, before forming the Mickey Mouse Club (MMC) – which became the vehicle for selling its products.

As membership of MMC grew, so too did its product sales, and the company then diversified into music, training and educational videos.

Step-by-step, product-by-product, market-by-market, Disney grew and today they dominate many different industries, with amusement parks, movies, television, clubs, books cruise lines, resort properties, radio broadcasting, musical recordings, animation art and products. These days they have also recently moved into software and streaming through Disney+!

Each diversification strategy was carefully planned and leveraged upon the much-loved Disney name to strengthen its position and continue to create value for its shareholders and customers.

While not all of us can reach the dizzying heights of Disney, a lot can be learned from the way in which they have executed their diversification over their company lifetime.

More can be learned about this epic company here.

There are many different ways you can diversify in business and the one that best suits your business model will depend upon the industry you’re in and what your growth goals are.

Let’s run through a few options for diversifying.

Either way, your plan is to add value to your current business and the lives of new customers you’re seeking out in untapped markets, so keep this in mind along the way.

There is no doubt diversifying can bring many benefits to business.

Including:

• The creation of new income streams
• New opportunities for growth and success
• Managing revenues for seasonal or cyclical products
• To increase appeal to existing customers

But the process of diversification should always follow a well-thought-out plan.

Importantly, before diversifying, it is important to ensure you have a profitable and stable core business to build upon.

If you’re not quite there yet, work on this first before you consider how to diversify, or else new products and services could prove to be nothing more than a distraction from what you do at your core.

As always, our hub of multi-disciplinary experts here at Ingredior are here to help.

Our whole-of-business approach encompasses strategic finance, strategic marketing, business development, business strategy and other services required to assist businesses to harness growth while minimizing costs, maximizing returns and setting up for long-term success.

We are available to chat or answer any of your questions.

Love it or hate it, it’s almost the end of financial year (EOFY).

EOFY is an important time for businesses of all shapes and sizes, but it does add some tasks to the ever-expanding to-do list and can be a super busy time for you and the organisation. You might be tying up bookkeeping loose ends, complete tax returns and BAS, or you might have to pull together annual expenses from your ‘department’ to submit to accounts, or you might be creating forecast budgets the next financial year… or all of the above.

If you feel overwhelmed by what you’re required to do, you’re not alone. Most leaders, managers, supervisors and business owners tend to feel the same. But EOFY doesn’t have to be a painful time, in fact, it can present many opportunities for growth and reflection.

Here’s how to meet your EOFY obligations and grow your business at the same time.