Why Every Decision Counts

Running a business means making lots of decisions. Some are small, like choosing a supplier. Others are big, like hiring staff or investing in new technology. But every choice affects your finances.

The difference between a thriving business and one struggling to stay afloat often comes down to how well financial decisions are managed.

At RedBrick, we’ve seen it all. The businesses that succeed understand their numbers, think ahead, and make decisions based on solid financial insight, not guesswork.

So, how can you do the same?

This guide will break it down, giving you practical insights into how your business decisions impact cash flow, profitability, and long-term sustainability.

The Three Key Financial Impacts of Every Business Decision

Whether you’re hiring a new team member, launching a product, investing in assets, or adjusting pricing, your choices will affect your business in three main ways:

1. Cash Flow – Can You Afford It?

Every decision has an immediate effect on your bank balance. Paying upfront for equipment, offering extended credit terms, or increasing inventory all tie up cash. Without careful planning, even a profitable business can run into cash flow problems.

Before making a financial commitment, ask yourself:

• How will this affect cash flow over the next 3, 6, and 12 months?
• Do I need to adjust expenses or secure financing to keep things running smoothly?

2. Profitability – Is It Worth It?

A decision might bring in more revenue, but does it improve your bottom line?

Expanding your team could boost productivity, but if salaries eat into profits, the move may not be sustainable. The same goes for discounts, you may sell more but at the cost of profitability.

Revenue = Vanity. Profit = Sanity. Cash is King.

Assess the potential return on investment (ROI):

• Will this decision increase profits in the long term?
• What’s the break-even point, and how long will it take to get there?

3. Business Growth & Sustainability – Will It Help You Thrive?

Short-term gains shouldn’t come at the expense of long-term stability, reputation, and track record. A quick cash boost from selling off assets might look good now, but what happens in six months? Sustainable growth means thinking beyond today’s bank balance.

Consider:

• Will this decision support your long-term business goals?
• Does it align with your strategic financial plan?

Common Business Decisions & Their Financial Consequences

Here’s how key business choices can impact your finances:

Hiring a New Employee

• Cash Flow: More payroll expenses, tax obligations, and potential training costs.
• Profitability: Can increase revenue if productivity rises, but only if wage costs don’t outweigh income.
• Growth: Investing in people can help scale operations, but only if planned correctly.

Investing in Technology

• Cash Flow: Upfront costs for software/hardware, or ongoing subscription fees.
• Profitability: Can reduce manual errors, speed up operations, and increase efficiency.
• Growth: Long-term competitive advantage if it improves service delivery or reduces costs.

Changing Pricing Strategy

• Cash Flow: Immediate impact on revenue, either positive (higher prices) or negative (discounts).
• Profitability: Needs careful analysis, higher prices may mean fewer customers, while lower prices may require more volume to maintain profits. Pricing is an art form and depends on a multitude of factors, such as how elastic your product/service is with consumers, and the psychological factors driving their behaviour.
• Growth: Helps position your business in the market but must align with overall strategy.

Practical Steps to Make Better Financial Decisions

1. Use Data, Not Guesswork

Decisions based on ‘gut feel’ can be risky. Instead, look at financial reports, market trends, and performance data. If you’re not tracking key metrics, now’s the time to start. If something is not measured, it’s unlikely to be improved.

2. Scenario Planning: Play the ‘What If?’ Game

Before making a big decision, run different scenarios:

• What happens if sales drop 20%?
• Can we afford this investment if a major client leaves?
• If interest rates rise, how will loan repayments change?

This is called sensitivity analysis, and can also factor into scenario planning, and A/B testing (as in marketing) with different strategies over time.

3. Get a Second Opinion

It’s easy to be too close to a decision. A fresh pair of eyes, whether it’s a mentor, a financial advisor, or your accountant, can spot risks and opportunities you might have missed. Everyone’s level of accuracy and attention to detail varies, at different points in time, along with their prior experience and skillset. A range of eyes, helps to minimise the chance of problems and errors.

4. Keep Cash Reserves

No matter how well you plan, surprises happen. A financial buffer means you can handle unexpected costs without making hasty, costly decisions. It also minimises the time and cost associated with maintaining an accurate, granular, cashflow, or optimising treasury management. The irony with poor businesses is that they often cost even more to run! A perpetual loop, which makes the situation worse.

5. Measure, Review, Adjust

Every financial decision should be reviewed. Did it have the impact you expected? If not, what can you learn? Good financial management isn’t about being right every time, it’s about adapting quickly. Act, Succeed/Fail, Learn, Improve, Act again.

The Cost of Getting It Wrong

Poor financial decisions can derail a business. We’ve seen companies overextend on hiring, miscalculate pricing strategies, hire poor people, or invest in the wrong technology, only to struggle later. The good news? These mistakes can be avoided with the right financial guidance.

That’s where RedBrick comes in. We help businesses make smarter financial choices, ensuring they stay profitable, sustainable, and in control.

If you want a better home for your business finances, email us: hello@redbrickaccounting.com