When you think of your company’s finances, is the image clear? Or is it more like the windshield of your car during a sleet storm after you ignored your mechanic’s offer to replace your wiper blades?
Clear financial pictures don’t have to be complicated, but they are important. Knowing where you are and where you’re going means the difference between getting there safely and ending up in the ditch.
Do you only have five minutes to consider the numbers? No problem. Here are the three things to look at: 1) Revenue. 2) Gross Profit. 3) Net Income. You should always be aware of these three figures. If you don’t, partner with someone who will make you aware of them.
If you have a bit more time, add current assets and liabilities to your list of considerations. The best way to examine these two: an updated balance sheet. If your finance people aren’t producing these yet, it’s time to start.
Finally, don’t neglect your forecast. Lofty goals are great; pragmatism is even better. Forecasts are critical for tax planning purposes and mid-course corrections.
We know you don’t have a lot of time, so it’s all about knowing where to look. Pull these reports. Pay attention to them. It’s worth the effort to stay out of the ditch.