Financial Checkup Tips for Your Business

As the calendar year comes to a close, many fiscal years follow suit. This is often when a financial review for small businesses becomes especially useful. Whether the countdown to the new year lands in your busiest season or your slowest, it’s still a good moment to pause. Take time to reflect on your financial goals for the year ahead. Then assess whether the goals you set previously have been met.

You may not be able to review your full year of financials yet. That may take a few more months. Even so, now is a good time to check your systems. Make sure everything is set up to make that future review as seamless as possible. Some questions to answer:

Are my accounting systems internal or external?

Many small business owners are reticent to hire outside help for accounting. This includes organizing bills or setting up a chart of accounts. In many cases, a little help can go a long way. This is especially true if your expertise is tied more to running your business than to accounting and finances.

Full tax filings may not be due for a few months. Still, preparing your data throughout the year can make the filing process much easier when the deadline arrives.

You can also run a cost-benefit analysis on your time. Compare the hours you spend entering financial data with the time you could spend growing your business, developing new products or services, or expanding your service area.

Reviewing End-of-Year Financials

Once you have the data in place—either self-prepared or completed through an outside service—review your key financial statements. Understand your balance sheet, profit and loss statement, and cash flow ( click to download).

Are there any expenses that surprised you?

Are your income categories granular enough for you to see what aspects of your business are helping the most with the bottom line?

Is there enough profit or equity in your business to take an owner’s draw, or is any overage better used as a reinvestment into the business?

Is now a good time for an end-of-year financial review?

If this is the busiest time of year for your business, mark your calendar for a slower period. Use that time to thoroughly review your financial systems and data.

If this time of year is slower for your business, make a plan to review what is available to you. Even if the fiscal year has not fully closed, an early course correction can save time later.

Did you have the capital you needed to work effectively this year?

Examine the capital you have available to you. If you found your business being held back, think about how much you would need to operate at the level that is best for you.

If you do apply for funding, having EOY financials done already can be a significant positive signal about your business’s preparedness.

Lenders will want an understanding of what your cash flow needs and wants are – if you come into the funding conversation with a solid foundation of understanding yourself, the rest of the process will be that much smoother.

Set and reevaluate goals

Did you meet the goals you set last year for your business, either in business productivity or profitability?

If you didn’t, can the goals be adjusted to match the reality of operations, or do they need to be reimagined altogether?

If reviewing your financials brings up questions around planning or cash flow, Business Impact NW has support available through coaching and training.