Analyzing your business' financial statements can provide a lot of insight into where the business is going and how you're doing currently. But getting an accurate reading on your business' financial health will take a lot of preparation and precision. Here are some steps for working with your financial statements to extract the maximum amount of data.
Step 1: Hire a Consultant
The first thing to do is consider hiring a consultant. A financial statement consulting company such as Navicor Consulting will be able to help you get set up with best practices for managing financial reporting. They can help you set goals for your financial management and take care of the analysis for you.
Step 2: Decide What Statistics to Track
A financial statement could include a number of statistics. Things like profit and loss or current assets and liabilities may be the standards, but your reports could get much more detailed to include things like staff utilization and projected sales. But whatever you wish to include, you may need to decide well in advance so that you can get your accounting system set up to track the statistics correctly.
Step 3: Analyze Statements on a Regular Basis
It's a great idea to have your financial statements prepared on at least a monthly basis. These monthly checkups will help you ensure that your business is on track and, if not, let you make small adjustments before you get too far off course. And then, when you do a yearly review, you'll have data points to look at in your trajectory.
Step 4: Learn How to Benchmark
It can be helpful to benchmark against companies of a similar size and in the same industry. Your financial statement consulting company may be able to connect you with other business owners who are willing to share data for the benefit of both businesses.
Step 5: Invite Employees to Participate
Finally, in order to get the most out of your financial planning, you might want to get feedback from your employees. They don't need to get all of the details, per se; it's possible to let employees in on the general successes and struggles of the business by using charts or graphs that obscure the exact numbers. It can be helpful to troubleshoot some of the business' problem areas with all of the employees at least once a year; you never know where the next bright idea will come from when you've been staring at the numbers all year.Share