As a successful business owner you’ll need to regularly analyze the financial performance of your business.  Unfortunately, as your business grows and you become busier the demands on running your business tend to take you away from the important task of analyzing the financial state of your business.

     I get many calls from worried business owners who get to the end of the year and wonder, “How did this happen?”  They get to the end of the year and discover that their expenses out of control, or that their tax liabilities are under funded, or that they are facing a cash flow crisis.

     Here are 3 basic actions you can take to ensure you are never caught asking “How did this happen?”

1. Ensure Accurate Information.  Many business owners make the mistake of not spending the time or hiring the expertise to manage their financial information.  Without accurate and timely financial information your management decisions will be inaccurate.  You won’t be able to budget accurately; you won’t be able to anticipate your cash flow needs; and you’ll lose credibility with third parties that rely on your financial information - such as your bank.

2. Have Account Reconciled.  Do you reconcile your bank statements, loan statements, and credit card statements as soon as they arrive?  Banks and other financial institutions make mistakes.  You may find out you missed making an entry that would materially change your financial situation.

3. Have Your Finances Reviewed by Someone Who Understands the Information.  If you have the expertise to review and understand your financial statements you are a rare business owner.  If you don’t have the expertise to understand your financial statements, then hire someone who can review your financial statements and assist you in making decisions based on your finances.  This might be your accounting firm, your banker, or a business coach.

     Taking these three basic actions will ensure that your financial information is an accurate reflection of your business’ performance.