With three quarters the financial year behind us, your business may be in desperate need of a quarterly review.
While your business needs an annual plan, monthly plans and weekly flash reports, a quarterly review has some unique benefits that make it a necessity.
- A quarterly review gives you a snapshot of your business. It will smooth out the monthly fluctuations in your revenue and inventory cycles. This results in a benchmark that’s less volatile.
- You need to check that you’re putting aside enough for your PAYG, GST and annual taxes. It doesn’t matter if you’re self-employed or a small business owner, you need to be putting the money aside each month to meet these payments.
- Quarterly reviews make it easier to identify any seasonal revenue patterns. This can help you recognise and understand how your products or services are impacted by the different times of the year.
- Compare your quarterly results against last year. It will provide a clear picture of how your business is progressing from one year to the next.
- A quarterly review can help you identify any areas of weaknesses are areas that need improvement. Catching these early allows you to address them before they become serious problems. Because your monthly reports fluctuate each month, the issue may not be as evident to you. And waiting until your annual review will be too late.
No one likes surprises, especially when it comes to your financial reporting. Your quarterly review is your chance to see how things are going, so you can check which areas of the business are running successfully or under-performing.
Here are a few questions to ask yourself as you work through your 3rd quarter review:
- How is your revenue looking? How much have you made so far? What is your forecast for the end of the financial year?
- What about your sales projections for the 4th quarter? Are you expecting any big sales or new projects?
- Are you making more or less revenue than last year?
- How is your profit looking? Is it tracking higher or lower than your revenue growth?
- Are certain seasons of the year busier or less busy than others? Have your financial projections accounted for this?
- Can you make any moves to minimise your tax liability by the end of June? For example, could you invest more money on business expenses this year (such as new business equipment, marketing expenses, new technology, etc.)? Or you could defer some billing so that it occurs after 1st July. It can make sense to allocate these funds in a way that reduces your tax liability, especially if you expect to have some additional money at the end of the year. Ask your accountant to help you decide which strategy is the right one for your financial situation.
Your 3rd quarter review should also take a closer look at your operations and the strategy behind your business. It’s an excellent time to ask:
- Which products, services or accounts make up the most significant proportion of your business revenue?
- Which products, services or accounts are underperforming and need to be reviewed or removed?
- Where do your business expenses coming from? Are there any unexpected or excessive business expenses that you can minimise?
Your Big Goals
The 3rd quarter review is a chance to take a step back and look at the direction of your business. This is the time to do some visionary thinking and dreaming. Where do you see your business heading in the future? Ask yourself the following questions:
- What were the big three things that held you back this year? Which goals for this current year have you NOT achieved, and why?
- What are your top priorities for the 4th quarter? Don’t only consider making money and keeping customer’s happy. You also need to think about how you want to work “on” the business.
- How can you redirect your energy and resources? So you spend less time on the things that are holding back your business, and spend more time on growth?
- If you could start next year with a clean slate, what would be the top three goals for your business? (Don’t forget to dream big!)
When you’re in business, it seems like every year goes faster than the last. Your time is precious, and I know that there are dozens of interruptions and distractions that come up during the week. That’s why it’s important to take the time to ask these thought-provoking questions. It forces you to think hard about how you can improve your business.
The 4th quarter lies ahead of you. There is still time to make changes, both for this year and for the next. A quarterly business review will make sure your business is on the right track!
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Strategies to manage cash flow, understand business financials and improve profitability.
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