Let’s face it. You didn’t start your business because you dream about analyzing financial statements. You started it because you have a vision and, more than likely, you love what you do! Owning and operating a business takes dedication, leadership, and many long hours investing in the success of your business. The most asked questions we get from business owners ends up being just that: “Am I successful? How am I doing?”
While each business may have its own definition of success, understanding and be informed about your finances not only helps you understand how you’re doing, but also allows you to understand your profitability, whether you’re spending money in the right places if there are opportunities for efficiencies if you’re working toward your goals, and if you could use a financial partner to help you work through the answers to your toughest questions. Questions like the ones we’ve listed from clients here:
1) Am I profitable?
When measuring your business in terms of “success,” profitability is one of the most important benchmarks to understand when reviewing your financials regularly. Reviewing your Profit and Loss (P&L) Statement can feel like a mundane task but understanding the relationship your revenue has with your business expenses, and the resulting profit, is critical.
When you are able to determine what impacts your profitability, you can then make the important business decisions to increase it.
2) Are my expenses in line?
A thorough financial assessment may reveal that you are paying too much in one area or too little in another. For example, you may be spending too much on advertising, but too little on payroll.
Reviewing your expenses allows you to see opportunities to shop around for more affordable vendors. You may find that adding an additional staff member would allow for an increase in productivity, driving more revenue.
Understanding industry targets may help you decide to reduce certain expense categories. Or, often, we find that the right answer is to find ways to generate more revenue to right-size the expenses you currently have.
3) Am I working toward my goals?
Making business decisions is a critical component of your day, but many times business owners allow circumstances to dictate what those decisions are—regardless of whether they support your long-term goals. Conducting frequent financial assessments allows you to evaluate your business and understand the steps needed to achieve your goals.
Maybe your goal is to grow revenue by 15% year over year for the next 5 years. Perhaps you are looking to grow your business to retire or sell in the next 10 years. Understanding how your finances play into your future can be a key component in the success of your business. When you know what your goals are and understand the impact your decisions have on your finances, you are better equipped to make a financial plan and stick with it.
4) Do I need a financial partner?
Planning for the future and staying accountable to your business goals is one of the many ways we help our clients each day through financial and strategic consulting. Regardless of the phase of your business, we recommend that you review your business financials at least once a month to understand your performance and assess your progress to your goals. To support that recommendation, we offer complimentary financial assessments to business owners and healthcare practices interested in answering some of the questions reviewed above.
After completing a financial assessment with our financial consulting team, you will receive a complimentary summary of your financials as compared to industry targets.
Is this something that could change the way you make business decisions? Contact us
and a member of Maven Financial Partners will reach out to schedule your assessment.