Each month, your accounting system yields actionable information for you to run your business better. Here are some key reports that all business owners should review every month.
A quick review of the balance sheet can tell you the balances of your current assets and current liabilities. Current assets should always be larger than current liabilities; if it’s not, you may have liquidity issues.
You can also take a look at these accounts: cash, accounts receivable, and accounts payable. They should look reasonable to you based on your business history.
Accounts Payable Aging
Hopefully, this report is clean and you are able to pay all of your bills on time. If you have an unusually large amount in this account, you’ll want to make sure you have the future cash to pay the bills.
The first number most entrepreneurs look at on the income statement is profit. It’s a good idea to review every account balance on this report to see if it is what you expected. Some questions to ask yourself include:
Did I generate the amount of revenue that I expected? If not, should I ramp up marketing for the next few months?
Do all of my expenses look reasonable? Are there any numbers that look too high?
Are my payroll expenses in line with what I was expecting?
Which accounts caused me to generate more or less profit?
What can I do next month to improve performance and increase profit?
These three reports are very basic, but they are also very key to your business. To profit from these reports, it’s up to you to take action in your business to improve your success.
Please let us know if you need further help determining how to handle the finances in your fitness business.