The Right Perspective
Updated: May 16, 2018
Months ago I sat down with a new small business client & their bookkeeping/ tax accountant to begin creating a model & forecast ie a plan for the business. During so the client mentioned the intent on buying a large new home. To date they relied on their accountant for planning purposes & to manage the finances of the business. The case contrasted an accountants point of view with our own. The client who recently started a business (1 year old) that was cash flow positive mentioned was seeking ways to get qualified to purchase a home. The account was focused on ways to show more income to get qualified for a loan. Being the consultant in the room I started asking questions about the business and although the business was growing becoming cash flow positive only recently, it was doing so on almost exclusively from one client. In other words, adding one client boosted growth resulting in the business getting into the black cash flow wise. This client represented over 30% of sales to boot. I suggested to the client to wait a bit longer to see if the rest of the business begins to grow before venturing into creating such a large liability in the form of mortgage. Further, since the client was recent and was an ongoing revenue stream I suggested wait to see how the client relationship evolves. Months went by and the client called me with terrible news that the large client cut back on their services. The good news was the client, did not pursue the purchase of the home & didn't extend themselves in such a way to put not only their personal finances at risk, but also the business's in turn. The moral of the story is business owners should consider financial decisions in BOTH their personal lives and business as in some cases they are one of the same since their income and credit worthiness is tied together. Further taking risk either your business or personal life can impact either. At CCS we consider both for our clients. To gain from our insights please contact us or sign up for email updates via https://www.charlotteconsultantservices.com/news-update.