The Simple 5-Step Financial Assessment Every Business Owner NeedsMar 03, 2023
As a business owner, one of the most critical aspects of running a profitable and valuable business is having a good understanding of your finances. However, it's not uncommon for many business owners to lack basic financial knowledge or to struggle with managing their finances effectively.
Today I'm going to take you through a simple two-page financial assessment that will help you get more profitable, reduce chaos in your business, and build something that you can sell for a lot of money someday. By completing this assessment, you'll come away with a plan to start making progress in managing your finances effectively.
The first section is all about establishing a foundation. You need to have a basic understanding of financial terms like cost of goods sold, net profit, gross profit, balance sheet, and accounts receivable. You don't need to be an accountant, but having a working knowledge of these basic building blocks is critical.
The second section is about getting your accounting structure in place. This typically involves setting up an accounting system like QuickBooks desktop or QuickBooks Online, and ensuring that the information going into the system is accurate and meaningful.
The third section is all about getting into the bookkeeping discipline. This means making sure that you're inputting the necessary data into your accounting system on a regular basis. You need to develop a routine for daily, weekly, monthly, quarterly, and annual bookkeeping tasks.
The fourth section is about analyzing the health of the business. Once you have meaningful reports generated from your accounting system, you can run reports to analyze the financial health of your business. You can run profit and loss reports, job costing reports, and reports on individual personnel or production managers. This will allow you to strategize, figure out what's working, what's not working, and make adjustments accordingly.
The fifth and final section is about protecting yourself financially in your business. To shield yourself from errors and deceit, it's crucial to establish reliable systems. Examples of such measures are setting up financial controls, dividing responsibilities among team members, and carrying out internal audits. These practices will aid in keeping your finances secure and in check.
Now that you understand the five sections of the financial assessment, it's time to take action. Click here to download the assessment. It will take you less than five minutes to complete. Once you've completed it, you can either email it to me or book a call with me, and we'll discuss your results at no charge. Reach out to me by phone or email. I look forward to hearing from you.
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