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Your Financial Check-Up

Top 3 Quick-Check

  • Month to Date (MTD) and Year to Date (YTD) Sales Sales are how we get cash into our business. You should always have an idea of where your month-to-date revenue stands. Revenue drives everything else.

  • Labor Productivity Ratio Your labor productivity ratio is calculated as Total Revenue / (Gross wages not including officers). This is a measure of how effective your labor costs are at producing revenue, especially in a service business (where COGS/Gross Profit aren't as relevant). A healthy value for this ratio is 2.5 to 4.

  • YTD Cashflow At its most basic calculation, this is the sum of any operating account bank balances less the same balances on Jan 1. While there is a lot of value to be gained in understanding cashflow from operations vs financing or investment, a quick-check value here will at least tell us if we're up or down YTD.

Detailed Check-Up

Cashflow [Cash is king!]

  • I know what monthly revenue goals we have to hit: y/n

  • I know which months of our year are big months and slow months: y/n

  • My outstanding customer balance (A/R) is: _____________

  • The amount of accounts over 90 days is: _____________

  • I know what my monthly operating costs are: y/n

  • My three biggest monthly costs are: _____________, _____________, and _____________

  • I know which bills are coming up, and they get recorded in our accounting system BEFORE they are paid: y/n

  • We have _____ months of average expenses in reserve: 3, 6, 12

Financial Comprehension

  • Our YTD cash from operations is _____________. Cash from investing is _____________. Cash from financing is _____________.

  • We review my monthly financial statements every month in a timely manner so they influence my decisions: y/n

  • Our three biggest customers are: _____________, _____________, and _____________.

  • They represent _______%, _______%, and _______% of our annual revenue.

  • We don't buy equipment without a plan, instead I know our annual Capital Expenditures (CAPEX) cost: y/n

  • I know how much our next quarter's tax estimates are: y/n

  • I've been able to take a dividend/distribution of profit from the company in addition to normal officer compensation & coverage for tax payments: y/n

Succession Planning and Disaster Preparedness

  • I have a month/year in mind I'd like to retire: y/n

  • I already have a successor I've discussed this with: y/n

  • I know which key positions there are in my company, and their plans for retirement: y/n

  • I have a will and estate plan that includes my business ownership: y/n

  • We have keyman life insurance and/or buy-sell insurance in place in case I pass early: y/n

  • We have no known pending lawsuits: y/n

  • We have a written cybersecurity policy and insurance coverage in place: y/n

  • We have a process in place to identify and convert critical software platforms before we're forced to: y/n

  • We are current on all tax obligations: y/n

  • We know who our target market is, and who is not: y/n

  • We know why our best customers love us: y/n

  • We know why our employees continue to work with us: y/n

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