Review Your Financial Statements
Hire an accountant who is available to communicate with you regularly. Make sure they understand your goals for the business and any upcoming changes, especially plans for growth. The more tuned in they are to your business goals, the more they can advise you on the steps needed to achieve them.
Throughout this guide, we have briefly mentioned financial statements. Three important statements are the Balance Sheet, Profit & Loss Statement, and Cash Flow Statement.
The Balance Sheet
Summarizes your business’s assets, liabilities, and equity at a specific point in time. This statement provides insight into your cash, inventory and other asset levels, how much money is owed to you (Accounts Receivable), how much money you owe (Accounts Payable), credit card and bank balances, and the equity in the company.
The Profit & Loss Statement
(Also referred to as an Income Statement) shows Profit and Net Income. Your Net Income provides insight into the profitability of your company, and includes all the operating costs of your company.
The Cash Flow Statement
Allows you to see when cash flows into and out of your business, and how your cash balances have changed over a period. It can also be used to project cash needs of the business.
The best practice is to review each of these financial reports on a monthly basis, as they gauge your business’s financial health and provide insights to timely decision making. They provide visibility to indicate whether you are on track to meet business goals, make projections, and even prepare you for tax season. Whatever type of business you run, it is crucial to stay on top of your business’s financial health.