We are all our worst critics. I know I am! BUT did you know, that without being critical, you can ask yourself (or, better yet, your business) some questions that can help guide and ensure your finances are on the right track. Here are 3 of the most important questions to ask yourself about your business finances:

How do my systems look?

We have to start by looking at your companies systems, specifically the financial systems. Most of the time, folks think that their company’s financial health has only to do with the actual money, not the management of it. While it is important to focus on the money (we will talk about that next), you must also address your systems. Money doesn’t do anything on it’s own, you control it. From paying for your rent this month, to buying that new camera, YOU are making those decisions. The easiest way to keep your company financially healthy is to manage your decisions inside of a system. That system is set up according to your comfort level, your business’s needs, and your financial goals. Take a look at our FREE template for taking control of your money systems HERE.

How does my cash situation look?

This is the basic measure of financial health for any company. Cash. How long can the business go on it’s own before it needs more money in the door? A good rule of thumb for this is to have 3-6 months of operating expenses in cash at any time. This will allow you to pay for the business’s expenses even if something unexpected arises. Your operating expenses include anything that is recurring monthly. This includes salaries, rent, and subscriptions. This doesn’t include one-time purchases. Don’t worry if you don’t have that amount saved yet. It’s a lot of cash! Create a plan that allows you to put away money monthly that contributes to your savings goal.

What does my forecast look like?

We should start with defining your forecast. Financial forecasting is predicting a company’s financial future by examining historical performance data, such as revenue, cash flow, expenses, or sales. In this case, we are referencing your companies sales. When you think about your sales forecast, what do you think your company will make in the next 6-12 months? You can predict this by looking at the historical sales you have had, your seasonality (When are sales higher or lower) and predicting how much your business will grow compared to last year at the same time. This is a very important number to be aware of. It helps you set goals, but also helps you understand how much revenue to expect in a certain time period.