As a business owner, your daily focus is often consumed by many things at any one time, like sales, customer relations and actually getting the job done. While all of these things keep you in your business, how well do you know it at its core? The difference between making the right decisions for your business often comes down to understanding the right metrics and being in tune with the health of your business.
Chartered accountant, Suzanne Bolton, considers these the six essential questions every business owner needs to answer regularly in order to steer their company in the right direction. Grab a cuppa and a pen and paper and see how your fare. And, if you’d like to feel more confident in your business finances, contact us to see how we can help.
1. When Is Your Company’s Year-End?
This may seem like a basic question, but knowing your financial year-end is crucial for planning and strategy. Your year-end determines when you need to have your financial statements ready, which sets the tone for tax filings, budgeting, and forecasting. Missing key deadlines can result in stress, inaccuracies and penalties. Be clear on this date, and more importantly, ensure you work with your accountant to ensure they are prepared well before that time.
2. What Is the Deadline for Your Accounts and Tax?
The timing of when you need to submit your accounts and tax returns could significantly affect your cash flow. Late submissions may result in fines and interest charges. Stay ahead by maintaining a clear schedule for these deadlines. Work closely with your accountant or financial team to make sure everything is ready on time. We regard the 7th of each month as our regular internal reminder
3. What Was Your Turnover Last Year, and What Is It Forecasted to Be This Year?
Knowing your past turnover gives you an immediate sense of how well your business has performed. More importantly, you should have a strong grasp of what the forecast looks like for this year. Are you on track to grow? How far are you from your targets? Keeping an eye on these numbers helps in setting realistic goals and identifying opportunities for growth or areas where you need to make adjustments.
4. What Is Your Gross Profit for the Year So Far? How Does That Compare to Last Year?
Gross profit is a critical indicator of the profitability of your business. It represents the revenue left after accounting for the costs of producing goods or services. Comparing your current year’s gross profit with last year’s performance can reveal key insights. Are you more efficient this year? Have costs risen unexpectedly? This information helps you identify trends and fine-tune your operational and pricing strategies.
5. What Is Your Biggest Challenge This Year?
No business is without its challenges, but the ability to pinpoint the biggest one can give you clarity and direction. Whether it’s rising costs, supply chain disruptions or managing cash flow, knowing your primary challenge allows you to focus your energy and resources where they are needed most. Acknowledging your main hurdles also sets the stage for problem-solving and developing contingency plans.
6. What Is Your Biggest Win This Year?
Just as important as understanding challenges is recognising and celebrating your biggest win. Did you land a major client? Launch a successful product? Reduce operational costs? Identifying your key success not only boosts morale but also shows what’s working well in your business. Your biggest win offers valuable lessons that can be replicated or expanded upon in the future.
Why These Questions Matter
Being able to confidently answer these six questions gives you a real-time pulse on your business’s performance and future outlook. By keeping these metrics top of mind, you’ll be better equipped to make informed decisions, allocate resources efficiently, and drive growth.
It’s not about micromanaging every detail; it’s about understanding the critical factors that influence the success of your business and serve as a compass to do so.
So, how well do you know your business? Rather than provide a place for self-judgement or criticism, we want these questions to encourage reflection and action, helping to ensure you’re in the know about your business’s financial and operational health.
If you’d like to discuss any of these questions with us, book in a client meeting.
