Entrepreneurs make the same mistake when measuring the health of their business. Focus on bottomline than topline.

Most people monitor their weight by stepping on a scale. Seems logical, right? If the numbers look good and the jeans still fit, must mean they’ve still got a great ass, err, healthy body, right?

Wrong! The accurate method of measuring health is body fat, or what percentage of your body is fat vs. muscle. Weight is an indicator of health, yes, but it’s not the whole story.

Entrepreneurs make the same mistake when measuring the health of their business. They focus on the top line (revenue) when they should be focused on the bottom line (cash reserves). If the sales numbers look good and the budget still fits, they must have a healthy business, right?

Yeah. You already know what we are going to say about that. We have said it before and we will say it again, you’re only as good as your ability to bail yourself out. If you’re just squeaking by, how are you going to survive a crisis?

Now, right now, figure out how much money you need to get through a six-month slump and start building up your cash reserves. Then develop your Daily Metrics, a proven system for keeping tabs on the health of your business. Think of it as a body mass indicator for your company, your ticket to a rockin’ bottom line.

- Payal Saha, Associate, HBJ Capital