It can be very easy to neglect your financials and just assume that as long as you’re making payroll, the lights are on and no tragedies are coming your way that all is well. But that’s not the kind of attitude that helps you protect and grow your business.
As 2011 draws to a close, resolve to sit down and review your business’ financial documents.
The most important thing here is that you’re honest with yourself.
Make or Break?
Compare the results of your financial statements with what you had planned for 2011. Would you call this a successful year? According to which metrics? Where did you over-perform? Perhaps you can adjust your expectations accordingly for 2012 and make more accurate projections. This will help you plan better in the coming year.
What goals did you miss? Why did you miss them? Was it some singular event or did things just not transpire as you’d hoped. The key is not just to review your financial documents but to act on the information you garner.
If you didn’t achieve particular goals, figure out what you can do differently. If it’s just because “the economy’s bad and no one is buying our [insert widget here]” then you better think long and hard about how 2012 is going to be different. The economy is not getting any better, and what people were reluctant to shell out for in 2011 is something they’ll be equally reluctant – if not more so – to shell out for in 2012. If you want to keep making payroll and enjoying the lights on, I suggest you think long and hard about how to do things better and different.
Part of reviewing your financial documents is also pulling out contracts and agreements and giving them a once over. Are there any personal guarantees that you made a while ago and have proved yourself worthy of removing? Go back to the beginning. You never know where you’ll find a personal guarantee that just doesn’t need to be there anymore.
Take a close look at all of your agreements, including your business’s operating agreement, employee contracts, contracts with financial institutions and more. It’s not that you have to do this every year, but because I feel like you might not have done this in a while (or ever), now is a great time to review those documents and ensure that you’re protecting yourself and your business.
Meet with Your Financial Team
This is also a great time to sit down with your accountant and/or financial advisor and think about your budget, your taxes and your opportunities. Perhaps things went well this year and you should be purchasing some key items before the end of the year. Maybe there’s an opportunity that you should be considering, but both your accountant and financial advisor will be hard pressed to share those with you if they can’t review accurate financial statements.
So, in Closing, Look Closer
The end of 2011 is a great time to work on your strategies and goals for 2012, but you can’t do that without an accurate financial understanding of how things went this year.
So, resolve to sit down with a P&L, Balance Sheet and documents that share the details of your business’s KPIs. Even if the news is bad, you won’t regret having done this. It’s one of the most important ways to prepare for a successful 2012.
Did you meet your goals? How or how not? Please share in the comments below.
Pingback: It’s 2012: Let’s Roll Up Our Sleeves and Get to Work « The Turnaround Authority