If you want your small business to succeed and climb up the ladder, you have to ensure your financial balance is healthy. But, how to give your small business a financial health check? No worries, Syndeo Accountants – the leading Brisbane firm offering expert financial assistance services – got you covered. Here’s a brief guide on how to check the financial health of your small business:
4 Key Steps to Check the Financial Health of Your Business
- Compare Financial Ratios
First and foremost, to be able to check your financial balance you have to have something to compare it to. For that reason, you should use financial ratios. Start by working out your own and compare your current to your past finances. Make sure you focus on liquidity, solvency, profitability, inventory, and return on investment. These are all figures which you should be able to find in your records if your business has good financial health. Otherwise, you’d better seek professional financial assistance. And, once you have your own ratios figured out, move on to compare them to other businesses in the same industry.
- Perform a Strategic Review
As a business owner, you should preferably carry out strategic reviews monthly or quarterly. Thanks to the new things you’ve learned meanwhile, you should then update your business plan and implement the needed changes to fit your long-term strategy. Alternatively, if you don’t have time to complete this so frequently, you could do a really thorough annual review, or simply ask Syndeo Accountants for help. Reviewing your strategies will help you identify any business elements that are harming your finance and that need to be improved to reach good financial health.
- Review Your Cash Flow
Next, as a small business owner, you have to ensure your business has a positive cash flow if you want to stay afloat. Namely, one of the main reasons for business failure is poor cash flow. Therefore, if paying monthly bills is a constant struggle for you, you should take this as a sure sign that your financial health is poor and act quickly. Check your cash flow, make a cash flow forecast, and follow certain cost-saving strategies.
- Check Your Debts
Last but not least, as soon as you finish the above-listed steps, ensure you review your debts and check how feasible is it for your business to pay monthly repayments. Plus, if you have taken out loans to keep your business and operate on debt finance, you clearly have to do something. For example, consolidate your debts into a single loan with lower monthly repayments and interest rates to be able to comfortably pay it off and reach a good financial balance. Although this last step is the least exciting of all, you definitely have to pay extra attention to it if you don’t want your financial health to take the hit.
The bottom line, if clearing your busy schedule and taking your time to sit down and thoroughly check your books and finance is quite challenging due to your hectic lifestyle, you’d better seek expert financial assistance from the leading accounting firm in Brisbane – Syndeo Group.