Why You Need A Financial Check Up Every YearDec 13, 2022
You probably get a physical or dental check-up every year. As a grooming business owner, you need to put your business finances through the same constructive scrutiny. Ideally, you will examine the financial direction of your business at several points during the year, but an annual in-depth checkup is necessary to keep your business fit and healthy. Here are some reasons and considerations for this financial checkup.
Is Your Business Model Working?
One reason it is important to perform a financial inventory on your business is to ensure your business model is effective. Are you getting revenue from mainly 4 week clients or from 6-8 week clients? Are you grooming a lot of once or twice a year pets? Are you grooming a lot of big dogs and they’re dragging down your profitability? Should you restructure your pricing, add a membership model or figure out if your business model aligns to your personal life goals? Think about your revenue goals and compare them to expenses. Is your payroll at 30% or less? Keep in mind that if your expenses are high, you will need to earn more revenue to cover these expenses and still make a profit. That is why business model analysis, profit review and looking at expenses are steps in the same process.
Can You Eliminate Expenses?
You may be surprised when performing your annual financial check-up to realize that you are spending more than you need on unnecessary expenses. Discovering this and cutting down on these expenses is like giving yourself a present or a bonus.
Having clear expectations of expenses throughout the year is important. Otherwise, you could be tempted mentally to inflate your profits based on revenues without taking expenses into the equation. Thinking carefully about what you need and getting rid of expenses by automating tasks and eliminating subscriptions you don’t use can maximize your profits. Consider stocking up your sinking fund to buy things during sales or getting bulk pricing when possible.
Are You Making the Most of Tax Savings Opportunities?
This is where having a really good accountant can be helpful. Unless you are a tax whiz, you may be missing some valuable tax benefits. Have a yearly review with your accountant and explore ways you can save on taxes, from claiming new business expenses to setting up a retirement fund that provides tax benefits.
In addition, regulations for tax breaks for small businesses are often passed without most people realizing it. An astute accountant is informed of these changes and can help you save an unexpected amount on your annual taxes.
What Are Your Financial Goals for the Year?
It is important not only to have goals in mind but to write them down and review them periodically. Check off those targets you have reached and set new ones. Raise the bar but keep your expectations reasonable. Create long-term goals you can achieve and check off in a year and short-term goals per week, month, and quarterly. These goals can be connected to net or gross profit, payroll, savings, hitting a full client list or whatever it is that helps keep you motivated.
A Clean Bill of Financial Health
The more conscious you are of your businesses’ financial health, the more successful you can be as a grooming business owner or solopreneur. Taking stock now and again, giving your revenue and expenses a thorough examination, and setting goals at least every year is essential for a healthy business. If you’ve taken the price increase masterclass you know how to calculate your KPI (key performance indicators) or business metrics. If you have an accountant, ask them to give you the percentages or help you understand your numbers.
Are Money Mistakes Costing You Revenue?
I’ve discovered that there are 4 common money mistakes that can halt a grooming business owner or solopreneur in their tracks. They can work 80-hour weeks but seem to never make enough money in their business. If you fall into this category, join my free workshop, and see if you’re making any of these money mistakes. You might be surprised but once you’re aware, you can make some changes and put yourself on a better financial space.
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