Give Your Business a Financial Check-Up
You visit your doctor for an annual exam and take your car in for tune-ups, but when was the last time your business got a check-up? Checking in on your company’s financial health annually will help your business to thrive, retain great employees, and contribute positively to your community.
Here are five steps of an effective annual financial check-up for your business. (And we promise, you won’t have to say “aaahh!”)
- Forecast what work you have set up for the year ahead. In manufacturing, that would translate to work orders and in the service industry to signed contracts. Compare what you have coming down the pike this year to what occurred last year to get an idea of whether you expect to have more work, the same amount, or less work this year.
- Take a look at your cash flow. Is there more money left at the end of the month than goes out? Make sure cash is flowing in and expenses are being managed. Again, compare a few months from this year with a few months from last year to give yourself a benchmark and be able to make adjustments to maintain positive cashflow.
- Perform a credit check-up. Think ahead to any major purchases you will need to make during the upcoming year and if you are in a good position credit-wise to make the purchase. Sometimes it takes a few weeks to get business credit in place, and you can avoid a stressful last-minute scramble by planning ahead.
Bonus tip: Create and continually update a spreadsheet that’s available at your fingertips that lists all the equipment you own as well as the equipment you owe money on. This information will help when you’re applying for credit.
- Create a profit & loss statement. This statement should summarize your revenues, costs, and expenses incurred during a specific period of time. This will provide information about whether your company can generate profit by increasing revenue, reducing costs, or both.
- Create a balance sheet. A balance sheet reports your company assets, liabilities, and shareholder equity at a specific point in time. This provides both investors and creditors with a snapshot as to how effectively you are managing and using your company resources.
Performing an annual financial check-up and maintaining key financial documents will help you evaluate where your business currently is, and help you get where you want to go!
We can help
We have the tools you need to manage your money well. Visit one of our branches or call 1-800-288-3425 to learn how we can help you keep your business growing.