Is the end of your fiscal year on the horizon? Even though spending time at a ballgame is more fun than reviewing your bookkeeping files (unless you’re us!), it’s important to have a solid financial line-up. Don’t strike out unexpectedly due to poor planning. Let’s get ready to play ball!
Make sure that your business reviews these areas, just as sports teams do:
What are your stats?
Gross Profit Margin = (Revenue minus COGS) divided by Revenue
Where should it be if you compare to the industry average?
Click here to find an updated table by industry
Average Collection period = Days X AR (Accounts Receivable)/Credit Sales.
Is it under 45 days? Does that work for you? What do you need for cash flow?
Debt Ratio = Total Debt/Total Assets
The higher your ratio, the more leveraged your company is (greater financial risk).
Working Capital = Current Assets minus Current Liabilities
This indicates whether you have enough short-term assets to cover your short-term debt.
Most people believe that a ratio between 1.2 and 2 is sufficient
What are your strengths?
Are your financial records kept in a neat and orderly manner?
Can you produce a cash flow statement if asked?
Are you in good financial health?
What are your weaknesses?
Do you keep your financial records in a shoe box?
Are you behind on paying any taxes?
Do you know where you are going next and who you are playing?
Do you have a budget or a forecast?
Can you compare last years finances to this year's and to your forecast?
Do you have your chart of accounts set up so that you can understand your financial statements?
Have you studied your competition sufficiently?
Do you ever wonder whether your competition is making more money than you?
Do you know how they run their business?
Do others know what is unique about your product or service?
We’d love to talk with you about how we can help keep you in the game for many seasons to come. Bring us your books and we can provide you with a review of your financial situation, so you can make informed decisions for the future.
Remember to visit our local parks for a breather after you get your finances sorted out! Click here for the Directory of Park Facilities.
Lynn Talbott, MBA, PHR, has over 20 years’ experience consulting with entrepreneurs of small to mid-sized businesses in the HR and office management capacity. Her specialty is Office/Human Resource Manager coaching and training and finding practical solutions for bookkeeping errors and HR blunders. Lynn has helped manage over 50 business start-ups and many of those companies continue to rely on her expertise today as they continue to grow.