Being able to understand your business finances and recognising when and how profit is made is vastly important. This is easily achieved by understanding financial jargon and reviewing monthly financial statements. To help with this, here is our guide on what is important when completing a financial review:
Profit and loss
Analyse your profit and loss (P&L). Breakdown where your income is coming from, what services and goods have been sold and how this equates in terms of profit levels. Next evaluate your wage bill, expenses and all relevant cost of sales. When you have these numbers, compare each element so that you can fully understand your profit. Ultimately this will then dictate what the cash in your business looks like and if you need any assistance to keeping a healthy cashflow balance.
Business goals
Having grasped some of the key business financials next up is to align this with the goals of the business. It is important to compare, measure and adapt for both the short term and the long term. Complete this by assessing what is happening across all facets of the business and identifying trends for changes in direction or markets.
Know what is important
Having continual knowledge of your financial situation and knowing what the most important KPI’s (key performance indicators) are, gives full visibility for the business. Keep a track on sources of revenue, biggest areas of expenditure and where cost savings can be made. Evaluate monthly so that you can make small adaptions rather than having to implement major changes.
Ask for help
Remember there is always help available. If changes are needed that could significantly affect cashflow then look for the right solutions. Don’t be afraid to seek specialist financial help, being able to fund new initiatives and market growth activities will help to fulfil all growth plans.
Remember this 5-step process
- Understand your financials
- Evaluate monthly performance
- Align business goals
- Track KPI’s
- Boost cashflow with business lending
Having the right financial goals will transform your business, providing clear insights, analysis and performance data. There is no better time to complete a financial review of your business than today. Remember, it is equally as important to evaluate all your business funding commitments, especially as there are some excellent deals becoming available daily.
If you need help with any aspects of your financial review or are search for new business funding options, then our team would be happy to help. To find out more please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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