Financial statements can be a useful ally in determining whether your financial goals are being met. They give an overview of past business activity that can help you plan more effectively for future business.

Whether you receive your financial statements weekly, monthly, or quarterly there are four main things you should look for during your periodic review.

• How do my current period numbers compare to prior period numbers? This can be useful in helping to know your business cycle and knowing when your clients are looking for your services. For example, this allows you to plan ahead and have more staff available during those peak times of year.
• Do the numbers make sense? Doing a high-level review of your financial statements will help you see irregularities and help identify possible areas of waste. Ask yourself questions like “have my revenues been consistent yet expenses continue to rise?” and “do I have large amounts of receivables waiting to be collected?” These types of general questions can give you a roadmap of where possible improvements can be made.
• Is my business doing well compared to other similar businesses in my industry? Comparing your financial results to your competitors is another great way to gauge whether you are optimizing your business operations. Financial statement benchmarking is one way to see how your business is measuring up to your competition. This also gives you a clear idea of what similar businesses are able to achieve and what you can expect from your operations.
• What are my financial statements telling me? One of the biggest reasons business owners don’t look at their financial statements is because they don’t understand what their financials are trying to say. A meeting with your CPA or financial advisor to review your financial statements will help direct you to those financial measures that are most pertinent to your business.

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