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Is it time to give your business a financial health check?

The business environment can be fairly dynamic. And implementing corporate changes, such as hiring more staff, rolling out marketing campaigns, and adjusting operations to marketplace fluctuations, can all impact your business’s financial position.

This is why it can pay to frequently assess your company’s financial health. Below are four aspects to consider when doing so.

BUDGETING

Keeping your budget up to date can help to ensure all costs are accounted for. This is important because, as the saying goes, “You can’t manage what you don’t measure”. By tracking your spending, you are able to identify where your different expenditures are occurring. Doing so may then allow you to assess whether your cash flow is being invested in the most efficient manner, or whether certain adjustments are necessary.

FINANCIAL SAFEGUARDS

An important aspect of your financial health includes financial safeguards, which can include insurance, reserve capital, and overdraft facilities.  Not only is it important to have these measures in place, but ideally they should reflect the business environment you’re currently operating in. Insurance policies can be tailored to suit the specific needs of the business, as an example, so it can help to review your policy and ensure you’re covered for everything you need – and nothing you don’t.

STAFFING

Staff can often be one of the most expensive elements of any business, so ensuring the correct level of staffing can play a vital role in maintaining your business’s financial health.

There is often an industry average regarding the percentage of costs that should be directed toward staffing. If your staff costs are higher than the industry average, it may be time to assess whether cost cutting can be made in this area. If they are lower, you may have some space to add on more staff to potentially increase your business’s output.

INTEREST RATES

Banks are constantly offering a range of financial products with varying interest rates and time frames. The Reserve Bank of Australia (RBA) reviews the official cash rate monthly, so if there is a reduction you might want to consider whether your current rate is competitive. Calling your bank or broker in order to maintain pressure to receive the best rate possible may result in a lower rate, potentially saving your business money in the process. Otherwise, it may be time to find a better deal.


0 comments | Posted by Reality Bytes - Real Estate Training Blog on 25/03/2015 at 12:00 AM | Categories: