Before you get involved with other things, schedule a mid-year checkup. No, we’re not talking about the height\/weight\/blood pressure kind of checkup, we’re talking about the income statement\/balance sheet\/cash flow kind of checkup — a review of your business’s financial operating fundamentals.<\/p>\n\n\n\n
If you review your vital financial information only when year-end rolls around, you may not know there’s a problem until it’s too late. The more often you take your company’s “pulse,” the sooner you’ll be able to notice — and react to — changes in your business situation.<\/p>\n\n\n\n
Check Your Vital Signs<\/strong><\/p>\n\n\n\n What should you be looking at? Start with the operating fundamentals. For example, what’s the status of accounts payable? When’s the last time you ran an aging report for accounts receivable? How quickly is your inventory turning? What is your profit margin?<\/p>\n\n\n\n These numbers are critical to running your business. You can’t make accurate decisions if your figures are old. And, by keeping track of key financial ratios, you can more readily spot trends that should be addressed sooner rather than later.<\/p>\n\n\n\n Monitor Your Budget<\/strong><\/p>\n\n\n\n Next, check your spending. If overspending is a problem, creating a comprehensive budget that establishes realistic guidelines is an effective remedy. Make sure you have a budgeted amount for every line item expense on your operating statement. Then track and compare actual spending to budgeted amounts on a regular basis.<\/p>\n\n\n\n