As a proprietor, running a business is extremely demanding. A regular review of your business isn't always practical, but avoiding the sit-down with your advisory circle for a review may result in financial problems that could have been prevented. Like meeting with your doctor for an annual check-up, it's good for your business’ health.
Establishing business goals & budgets
Taking a moment to sit down and hash out what you define as success is integral. This could be a specific revenue target, an ideal retirement age, or a plethora of other goals. Reviewing that measure of success on a regular basis, such as monthly, quarterly, or annually is important to achieving your business targets.
This can be achieved by creating a budget. Budgets help create stability - tracking your revenues and being diligent with your expenses can put you on a strong financial footing for the short and long term of your business. This will also allow you to note what requires improvements and what can be leveraged for further success and growth.
Review your expenses
It is likely that you review your revenues fairly regularly, but you should be reviewing your expenses just as often to note any significant fluctuations. Take the time to note redundant expenses that may be affecting your bottom line. Is there something that can stand to be eliminated?
Complete an Accounts Receivable Review
Regularly take the time to think critically about your accounts receivable ratios. Are you able to efficiently collect your credit sales from your customers? Are your customers often attempting to extend their credit terms? Asking yourself these questions while analyzing your accounts receivable puts you in an excellent position to reduce your allowance for doubtful accounts.
Taking the time semi-annually or annually to review your pricing is an important practice. Confrim your pricing is in line with the value of the product or service being provided, while also considering its fair market value. Note what your fixed and variable costs are, and ensure that your current pricing structure allows you to be profitable.
Meet with Your Advisory Team
Your advisory team is an invaluable resource to utilize. Consider who is on this team (such as your accountant, banking advisor, legal counsel, etc.) and meet with them semi-annually or annually to ensure you are making sound decisions. Your accountant could provide you with a tax reorganization if the business' growth rate is exceeding expectations. Maybe your banking advisor can lend more favourable credit terms. Your engagement with this group keeps the future of your business top of mind for everyone who wants to see you succeed.