Carrying out a financial heath check on your business can be a big process, but it can help you get a better handle on your company spending, savings and profitability. It can also help you know what changes to make to help grow and develop your company.
So how do you carry out a financial health check on your business, what areas should you cover and what should you look for? This guide aims to help.
A financial health check on your company involves checking, reviewing and analysing different financial information across the business. From operation costs to staff, services to clients, and budgets to expenses, there’s a lot to consider, depending on your business.
Turning to your business plan, looking at your financial forecast, and benchmarking is a good place to start when conducting a financial health check. You can compare forecasts with results and look at how your business sits within your industry. Things to look for include:
You should consider checking your company operation costs, along with your monthly payments, such as utility bills and loans. It can help you to identify if changes can be made, like your choice of bank, services and energy provider. Things to analyse include:
Your company departments, the staff in them, and the equipment they use, should also be reviewed. This information can help you know which areas of your business are the most effective. You can also work out which employees you might want to consider promoting, and which ones are costing your business too much and should be retrained. You should look at factors such as:
It’s important to look at the products and services you offer, and your pricing strategy, too. This can help you know which products you should invest in, and which prices you could increase or cut. You can also know those offerings that aren’t selling well, are costing your business too much, and you might want to discontinue. Things to review include:
A key area of your business to analyse when conducting a financial health check is your customers, clients and suppliers. This can help you know which make your company the most money and you should do more business with, and which cost you the most and you should perhaps consider not renewing contracts with in the future. Things to check include:
This is another area to look at when carrying out a financial health check on your business. Sometimes, expenses can go unnoticed, and budgets can gradually rise and get out of control, so it’s important to carefully review these areas of your spending. It can help you know where you can invest more money, such as your marketing budget, or what areas you should cut, like your business travel expenses. Things to review include:
Conducting a financial health check can be crucial when running a business. Not just to save and manage your company finances, but also to know what areas of costings and spending should be changed to develop your company for the better. To learn more about what you can find out from doing a check, read our blog, What can a financial health check uncover about a business?