Why should business owners look at their financials every month? The answer is crystal clear, "Why not!" As an entrepreneur you wear many hats, some hats you like more than others but you are responsible for the overall success of your business. This includes knowing the financial health of your company and keeping up to date financials. Here is why a monthly review by you is a priority.
Analyze Past Financials: Being aware of past results and reviewing past financial statements allows you to evaluate where you are today. For example, comparing accurate profit and loss information by of a product line or service over time can assist you in making decisions for the future by displaying on paper what is successful and what is not.
Analyze Right Now: Knowing exactly where your financial health is right now can assist you in strategies for the future. Your current financials teamed with your past financials will give you the tools to move forward into a clear and financially healthy future.
Strategize for Future Success: As stated above the past and present are extremely helpful for accessing where you are right now, which leads you into creating plans and strategies for the future. A very large part of your company's vision is your financial health. Forecasting feasible goals and workable budgets as well as analyzing what worked and what didn't will assist you in predicting the future.
Make Accurate Decisions: Knowing and understanding the financial health of your company will help you decide if you can expand, hire new employees, upgrade equipment, or purchase seasonal inventory, to name just a few. Accurate financials and understanding them will provide necessary information to move forward strategically.
Applying for Credit: As your business grows, you may decide to apply for a line of credit. Banks, financial institutions, and investors will ask for multiple forms of documentation including a business plan and your past and present financials before approving your applications. They will evaluate your business's financial health based on these records and use them as a guide to their overall risk.
Prepare for Tax Time: Part of being a business owner is preparing for and paying taxes, which can be a huge portion of your profits. Keeping accurate financials and reviewing them monthly will prepare you for working with your accountant at tax time. Accurate financials are legally necessary for submitting federal, state, and local tax returns.
You don't have to be an MBA or a CPA to learn how to keep accurate records but it is a good business decision to consult experts to guide you along your business journey. Ask us about it in your free 30-minute virtual coaching session. Just contact us at 949-484-6349 or fill out our online form.