Did you know that there are features in your accounting software you can use when you analyze your financials that paints a clear picture of where your business’s finances are at compared to last year? Check out the closing date feature in your accounting software. This feature allows you to reconcile your accounts so you can make sure your books are CORRECT!
Ok now what? We hear from entrepreneurs all the time, what the heck do I look at when I “analyze my financials”
Here are our a few of our questions from our strategic framework to ask yourself when you analyze your financials:
- Are your sales growing?
- Which products/services are growing? How can you optimize and double down on the growth?
- What products/services are decreasing? Why? What can you change?
- Do you anticipate that growth to continue or do you experience a seasonality
- Tip: Look at your profit & loss statement for the last 12 months to look at trends
- How are your expenses this year compared to last year?
- Are your expenses increasing or decreasing? Does that align with your goals for the year?
- Are you profitable this year? Are you saving for taxes?
Conduct a Profitability Analysis.
Take your total number of sales then subtract direct money spent to obtain goods and/or provide services.
Are you making a profit every time you sell your products or services?
How did that feel?
Are you feeling empowered and looking for more analysis to run so you can keep digging further but not sure how?
Write this information down so you can review this every month.
Your Profit Planner is the perfect place to record your analysis and guide you through a deeper analysis.