Review your finances

Reviewing and analysing your finances will help you to understand your business's performance and potential for growth. It can also help you to run your business more efficiently and make the best business decisions.

To paint the best picture of your business finances, review and analyse your key financial documents regularly. These may include your business's:

• Balance sheet – reports your assets and liabilities.
• Profit and loss statement – shows financial performance and profitability over time.
• Cash flow statement – the amount of cash generated over a period of time.
• Budget – compares estimated spending to actual spending.

Have a close look at each of your financial documents for any trends or things that are unusual. Any unusual numbers could indicate areas you need to work on in order to save money or increase sales. Things to look out for may include:

• declining sales
• low profit margins
• greater spending than budgeted for
• level of debt existing
• periods of high or low cash flow.

Benchmarking is a useful tool for comparing the performance of your business to others in the same industry.

The Australian Taxation Office’s small business benchmarks can help you compare your financial performance with other businesses similar to yours.