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Spring is a good time of year to get your business organized from a financial perspective. We’re all required to submit tax returns then. With the first quarter already completed, it’s a good time to take stock of your business’s financial well-being. Here are five tips for tidying your business finances.
1. Compare year-over-year financial performance. If you haven’t done it, schedule a time to sit down with your financial adviser, accountant, or bookkeeper to review your numbers and see how they stack up, compared to your budgeted projections from last year. If your expenses were over budget, you may want to set up a system to review your costs on a monthly basis. Consider dusting off your business plan, if you haven’t looked at it for a while, to see how you’re doing.
2. Establish emergency funds. Many businesses had to pare expenditures to survive the recent recession. Since you’re now used to running lean, continue to do so even if your economic situation has improved. Put additional profits aside to establish an emergency fund.
3. Build in extra margin. Use experience gained from the past few years to ensure that your business is protected in case the economy dips. This could mean establishing lines of credit or ensuring alternative access to capital in case of an emergency.
4. Review current benefit plans. Your health insurance premiums have probably increased in the past year. It’s worth doing a vendor comparison to see if there’s a more competitive plan that fits your needs and budget. If you have multiple employees and a 401(k) plan, it’s worth protecting yourself from a fiduciary standpoint by comparing your plan to others that exist. If you haven’t made changes in the last five years, this is an area in which you might find substantial savings by reducing fees or streamlining. This could benefit you and your employees. Do the same with disability and life insurance benefits.
5. Get Organized. Make sure you understand all the different places in which your financial information resides—and that you can access it. Where appropriate, consolidate multiple accounts.
Coastal Capital Group
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