Every year we take our car to the service and make the annual maintenance. We change the oil, look at the brake pads, and check the points to check. We change the brake pads and complete the brake and engine oil according to the instructions of the service officer.
What happens if we don't get our car annual maintenance? After 1 to 2 years, we will probably have to do an accident or cause serious damage to the engine. As a result, we have to pay a much greater cost when we have to maintain it with a small cost under normal conditions. Inevitably, we pay the price very heavily.
In the same way, if you are smart and caring for your health, we go to our doctor every year to check whether our health is in the right place and we pass the checkup. If there is something bad going on, we will take necessary measures from the start, without further deterioration of our health.
We need to have an annual checkup in order to stay healthy in our businesses and to keep things going smoothly. In this way, we can have the necessary measures from the beginning to reach the solution before the problems become chronic and the fire grows.
If you have not made a checkup to your company to this day, it is now a good time to start.
In the financial checkup we follow the steps below;
Step 1: Evaluate current situation and urgent business needs
The first step in any financial checkup is to evaluate where you are. Is your income at the level you expect and target? How are your expenses? How's your cash flow going? How is the situation of stocks compared to previous years?
Now it's time to look at your upcoming needs and plan your purchases and other investment expenditures. If high energy consumption is seriously affecting you, it is time to renew the heating or cooling systems. How much credit do you use to continue your business? Which types of credit would be more appropriate for you? Are the financial products you use complying with their activities?
This is a good time to make different changes considering your personal circumstances. Depending on your circumstances, it is necessary to reconsider your budget, investments and other financial problems.
Step 2: Setting goals
The second step in financial checks is the evaluation of financial targets. Ask yourself where you want to be in five years. Want to grow your business, increase profitability? Or, do you want to sell your business after a while or to let your son or daughter manage it? When do you intend to retire? Will your business's activities make it all possible? If so it is great. If not, do you know what you need to do that?
Don't know where to start? Make an appointment with your financial advisor, banker and other financial professionals. They can help you assess your financial strengths and weaknesses, and if you have difficulty paying your debts, they can offer new ideas to correct your cash flow or to restructure your company's debts.
An important point is to write your goals and other financial information, so you can have your figures for years to measure and compare.
Step 3: Evaluation of threats
You may have spent years to start a successful business. There are things you need to do to protect this investment.
An important step in the financial review is the assessment of risks. Threats may come from internal or external sources. You cannot prevent new rivals or changes in the economy. However, you can check how your company will respond to it or how it should adapt to these changes.
The biggest threat may be to lose an employee in the key role, or something that you have. A fire may be the misuse of your employee or the passing of the competitor, or a large number of natural and human disasters.
It is important that you understand your risks - which can change over the years - and take steps to protect yourself against them. These include measures such as securing and reviewing the risk by using your accounting practices, banks and insurance instruments - workplace, health, incapacity, auto insurance.
As such, you should also update your annual goals and plans. A business financial checkup also includes an assessment of debts. If your debt burden is too high, it's time to reevaluate it.
Step 4: Evaluation of Opportunities
Now, it is very good time to see the new opportunities that appear on the horizon. Is it time to get an investor partner in your business? Do you want to reveal a new product or service? Do these opportunities match the big financial picture in your mind? All these are the questions you should think about at least once a year.
Similarly, are there hidden gains that you are not aware of? Maybe you have a strong cash flow and you may be hesitant to use it to save money, invest, pay debts or buy new equipment.
The analysis of opportunities includes a detailed tax checkup, a good time for the middle of the year. In this way, you will have the time to implement some changes that can benefit you a lot.
You may wish to consider whether your investments show sufficient performance to comply with your long-term financial objectives and consider selling certain things that may adversely affect your performance.
Are you investing enough for retirement and are your plans ready? Can you maximize your tax regulatory strategies? If your answer is no, it's time for your financial advisor or banker to consult your options.
Step 5: Remember your personal and family goals
Even the most important business success of the world is not a real success if it causes stress and cannot meet the financial needs of your family. So the last and perhaps most important step of the financial checkup is to remember your personal and family goals.
Do you meet the standards you have set for a good life when you reach your defined business goals? If so, congratulations! It tells you a lot about your success as a business owner. If not, it is time to think about the changes needed.
None of the businesses are perfect. However, a good plan and frequent checkup can help your business to be strong and healthy and help you reach the point you want to reach.