Your End of Year Business Analysis
It’s hard to believe, but it’s almost the end of 2018 already. Where has the time gone? To be honest with you, this is my favorite time of year. Not only do I enjoy the holiday season, but I love doing my end of year numbers for my business and making my analysis about what went right and what went wrong during the past year.
As an entrepreneur, you need to take some time each year to evaluate how your business did financially. You need to look at what went right and what went wrong. And the best way to do that is to look at the end of year numbers. You see, the numbers never lie. You can learn a lot by evaluating the numbers.
Make it a point to set aside a few hours in January, after you have done your end of year business numbers, to analyze your business numbers. Sit down with your accountant or spouse if necessary and do the following things.
1. Update Your Yearly Profit and Loss Statement – The first thing you will need to do is finalize your profit and loss statement for the year and see how your business did. Did you make a profit? Or, did you lose money? Did you pay yourself a wage? If so, how much?
2. Update Your Yearly Net Worth Statement – The next thing you need to do is update your balance sheet for your business. This is a list of your business’s assets and liabilities. Does your business have a positive net worth? If not, did it improve from the previous year? What can you do to improve it in the year to come?
3. Compare Your Business This Year to Last Year – You want to look at your business this year compared to this time last year. How have you improved? What areas are your strongest? What are your weakest areas? Did your cash flow and net profit grow compared to last year's numbers?
4. Evaluate the Growth of Your Business for the Past Five Years on a Chart– Another smart thing to do is to look at the trend of your business during the past five years, if you have been in business that long. Is your business growing each year? If so, by what rate each year?
5. Make a Projection of Next Year’s Numbers – Based on this year’s numbers, you should be able to make projections for next year. Look at the growth rate each year and try to guesstimate what you will do in the next year.
6. Establish Goals for Next Year – Your last step is to set goals for the upcoming year. Set goals for revenue, sales, net profit, etc. Write all of your goals down and share them with your spouse and/or advisors.
The bottom line is that it is important to know the numbers in your business and to analyze them. There is always room for improvement in a business. Keep your finger on the pulse at all times.
What are your thoughts? Leave a comment below to let me know what you think. I look forward to hearing from you.
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