Financial Check-ins to Help You Stay on Top of Business From balance sheets to compensation plans, what you review and when you review it can help you keep a pulse on the financial health of your business.

Like most small and midsize business owners, A Florae owner Rachel Hunter juggles — a lot. That includes her list of financial to-dos. For example, twice a month, Hunter compares sales month to month and year over year. That's just one piece of the regular financial deep dive she takes into her event, retail, and floral business in Longmont, Colorado. "It's my priority to be on top of our financials," Hunter says.

The priorities, to-dos, and concerns — financial and otherwise — keep piling up for business owners like Hunter. Half of them struggle with inflation. Over one-third cite revenue as their biggest concern. Managing cash flow is difficult for over one-third of owners, too.

Add to this working more hours, feeling increased stress, and facing recruiting and retaining difficulties, and it's easy to see why some crucial financial check-ins may get less attention than they deserve. This list and suggested calendar frequency, along with some simple scheduling tips, can help you get done what you need (and want) to cross off your list.

Monthly financial check-ins

Cash flow, assets and liabilities (balance sheet), payroll

These pieces of your business's financial puzzle deserve the most regular review, says Mark West, national vice president of business solutions for Principal^®. "Looking at it at least monthly helps you identify trends—for example, is your revenue up but, proportionately, are your expenses up more?" West says.

Included in the cash flow number are not just normal expenses and revenue, but also adjustments for receivables and inventory as well as income depreciation. Taken together, they're good bellwethers for the month ahead. "With the current economic uncertainty, regular review of these may help you know if you need to pivot," West says.

Cost of doing business: inventory, sales, price point

Many business owners have fundamentally shifted their inventory planning over the last two years. "Some orders need to be placed far in advance because of potential delays," West says. "But then you risk loading up on goods that you may not need. For certain goods the supply chain seems to continue to be fundamentally broken, and it's very challenging when you have no control."

If inventory costs are dragging on your financial check-ins, you may have to up the frequency of supplier reviews. Can you keep more of one essential item on hand (and get it at a lower cost) to accommodate volatility in obtaining something else? That will also keep you continuously assessing price points and sales to adjust on all fronts.

Taxes

Your tax advisor can provide guidance on the timing for tax related reviews based on your business structure and filing deadlines.

Profit and loss statement

This statement gives you a point in time reference, particularly good to compare year to year. How often you do it depends on the setup of your business.

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Yearly financial check-ins

Growth goals, capital investments, succession plans, valuation

Taking a step back to look ahead is particularly difficult for very busy business owners, or hard to prioritize when the business is going well. "You may not think about capital investments, for example, until there's a problem," West says. "But evaluating those investments today is part of understanding how you will continue to grow five years from now."

West suggests a yearly check-in for all these big-picture plans. "Then you can fine tune it," he says. "If you have identified a successor, it's important to include them in your analysis. By including them you are positioning a smooth and successful transition in the future."

Line of credit, cash cushion

How often you review these items may depend on how solidified they are. For example, if you have a standing line of credit, a yearly check-in may be sufficient. If you've built up the cash cushion you feel is necessary, then a yearly review may help you determine if you need to add to it.

Hunter finds herself constantly thinking about her buffer and using it strategically to insulate the business's daily cash flow. "We saved for a van so we could pay for it in cash," she says. "At any time there can be unknowns, and I'm super conscious of the lulls that can come—because they always do."

Benefit and compensation reviews

With this check in, you can also stop and look at retention: What's your attrition compared to a year ago, and do you have insight into big changes? To gain insight into the benefits your employees want and need, consider a few communication tools such as surveys and small-group meetings.

You're busy running your business today. Get help planning for tomorrow at principal.com/benefits.