What should I do now? It seems like a simple question, but it can be a confounding, even intimidating decision to consider. Especially during times of crisis or economic uncertainty, business owners and operators find themselves grappling with difficult choices that will impact the health of their company forever. The actions they take could lead to survival or bankruptcy, and they feel the weight of their responsibility.
Businesses I’ve worked with are often facing a time of change and tough decisions. Owners and operators naturally want to make sure they’ve considered all relevant information and carefully weighed their options before taking action. The first step toward formulating a plan is to take a complete look at their business’s financial situation.
Whether you’re considering your options during a global pandemic, or searching for ways to improve your business model for more predictable circumstances, first things are always first: balance your books. Understand your payments—all those costs that stay with you even when contracts are lost. These may include rent, utilities, software subscriptions, loan interest, payroll, et cetera.
Get a handle on your income. How reliable is it? What accounts can you collect on now and where do you expect to see payment in the coming months?
Depending on the complexity and completeness of your financial statements, you may need to seek expert help and advice for this task; someone who can make sure all your records are up-to-date, complete, and categorized in a way that helps you make sense of the information.
You want to make sure the information on your balance sheet is valid. Incomplete or inaccurate balance sheets may lead you to take actions that are unhelpful, unnecessary, or even detrimental.
Take some time to find out what kind of relief opportunities are available to you through your banks, credit cards, and other financial institutions. Some lenders are prepared to offer certain forms of assistance to businesses and individuals.
Can loan payments be deferred? Can interest-only payments be made for a time? Are there SBA (Small Business Administration) loans or paycheck protection funds available to your business? The only way to find out is to ask and apply.
Many banks will require detailed financial statements in order to determine the kinds of assistance available to you. Your chances of finding some form of relief will increase when you are able to provide accurate, current financial information.
It’s no surprise that some service providers want to help out where they can. After all, if your business shuts its doors, they’ve just lost a paying customer.
Check with various service providers to see what kind of relief is available to you. Contact your utility providers to see if there are deferments or reduced rates available. Some insurance providers, cable companies, and even software subscriptions will offer discounted rates due to extenuating circumstances.
Find out if there are other ways to control costs, such as cutting back on service levels or pausing certain subscriptions for the time being. The more you know about your expenses and the cost-saving options available to you, the better you can prepare for and weather difficult times.
Once you have a firm grasp of your company’s financial health, understanding your known cash inflows and outflows, you can determine attainable business goals and how you want to go about achieving them.
Using your accurate balance sheet and profit & loss statement as primary bases of knowledge, project the next six to twelve months of costs and income. Make a business plan for this time period and establish processes to stay on top of your financial records.
This way, when changes occur, you’ll be ready and able to adjust your plans accordingly. Without a plan, businesses and people can become reactive and confused in their decision making, leading to poor adaptability. When a plan is in place, and all the pieces of the puzzle are understood well, the nature of any challenge is made more clear, and the tools you have to overcome it are familiar and ready.
First of all, know that you are not alone. I’ve had clients approach me with little more than a shoe box stuffed with receipts and a bank statement as records.
As laid out, everything you need to do to respond appropriately to a crisis or fluctuating markets is made possible by having a complete understanding of your financial statements. There are tools I recommend to my clients such as QuickBooks to help them record, organize and categorize all of their income and expenses.
This application in particular is a powerful tool that provides business owners an overview of their finances, and the ability to drill down into the details to identify opportunities for investment or cost control. Although it makes access to financial information easy, straightening out months or even years of incomplete bookkeeping will likely require professional assistance.
Getting help building a detailed, accurate set of financial statements is an investment into everything your business does. Implementing a process to keep your records current and detailed is essential to maintaining flexibility in any business climate.
I was approached by a client who owned a profitable advertising business. Their success had led to growth, and they needed to build a new office space. In meeting with his bank, the owner discovered his incomplete financial records were a roadblock to applying for a loan, which required detailed profit and loss statements. As a result, we had to go back and build their financial statements for the preceding three years! When we brought their books up to date, they were stunned at some of the details that we shed a light on, and made appropriate changes.
If it seems like I’m repeating myself, that’s because I am! Balance your books. If you have the staff and know-how to get it done, do it now. If you need to hire professional help, do it now. It doesn’t matter how well your business is doing, or what circumstances may prompt you to act; a comprehensive awareness of your company’s financial health is key to growth and sustainability.
Advantage Insights offers a Financial Systems Health Check, reviewing everything on your balance sheet, your profit & loss statements, and the processes you already have in place to record income and expenses. We put together a report on every item, including a status. Are you in good shape? Maybe there is something that needs to be removed or looked at more closely?
I’ll also provide my recommendations to help you achieve your business goals. Your cost of $297 will go toward any additional services you may choose to purchase. These include our clean-up service, bookkeeping service, and our advisory services, which provide budgets and forecasting, giving you a higher level of detail about your business’s financials and potential.
Start gathering the information you need to make informed decisions. With improved financial awareness, you can avoid lurking risks and take advantage of opportunities to improve your financial health.
Don’t wait to act. You can reach me by calling Advantage Insights at 402-281-3785, or email info@youradvantageinsights.com today.
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