As summer winds down, your business’s financial statements may be due for a quick check-up. Here are several review suggestions to help determine the health of your business prior to year-end.
- Balance sheet reconciliations. Reconcile each asset and liability account every quarter. A well-supported balance sheet can guide decisions about cash reserves, debt financing, inventory management, receivables, payables, and property. Regular monitoring can highlight vulnerabilities, providing time for corrective action.
- Debt service coverage. Do you have enough cash to adequately handle principal and interest payments? Calculate your cash flow to ensure you can handle both current and future monthly loan payments.
- Projected revenue. Take a look at your income statements and see how your revenue has performed so far this year versus what you thought your revenue was going to be. If revenue varies from what you expect, get with your sales and marketing team to pinpoint what has gone better, or worse, than expected.
- Projected expenses. Put a stop to disappearing cash by conducting a variance analysis of your expenses. What did you expect to spend so far in 2021 on salaries and wages compared to what you actually paid your employees? What about other big expenses like rent or insurance? Take the amount of money actually spent so far in 2021 in each of your major expense accounts and compare it to your spending forecast. Then create an updated forecast for the balance of the year.
A review of your financial statements now will help you be prepared if you need to navigate an obstacle or capitalize on potential opportunities to expand your business.
A recent survey by the National Federation of Independent Businesses (NFIB) found that many companies are struggling to attract and retain qualified workers. While some businesses have countered this shortage of workers by raising hourly rates to record levels according to the NFIB, other businesses don’t have the financial flexibility to do this.
If you’re a business that doesn’t have the financial resources to raise pay, consider differentiating yourself by adding unique employee benefits. After all, the cost of losing a potential or existing employee to a competitor may outstrip the expense of an easy-to-implement employee perk.
Here are several unique benefits to consider offering current and prospective employees:
- Flexible schedules. By creatively managing time, you can maintain workflow and keep employees productive. For example, some firms have offered a 9/80 work schedule. Over the course of two weeks, an employee works eight 9-hour days, one 8-hour day, and gets one day off. Another common option is the 4/10 schedule where each employee works four 10-hour days and takes every Friday off.
- On-site health and wellness perks. Some examples include allowing workers to visit a mobile dental clinic or registered nurse during work hours, negotiating a group discount at the local gym and providing employee gym memberships, or making weekly massages and lunch-break yoga classes available.
- Family support. On-site childcare for busy parents, rooms for nursing mothers and generous parental leave policies are family benefit options to consider. Some companies have implemented a program of chore help where the business covers the cost of laundry or cleaning services for workers who work long hours. For some businesses, permitting employees to work from home several days a week is another great perk for workers who have families and may need the location flexibility.
- Pet-friendly office. Let dog owners bring their furry companion to work on a periodic basis. Besides decreasing stress for the pet owner, dogs often facilitate group bonding. Other pet-friendly options include free training classes or discounted veterinary services. For employees who don’t own pets, pet-friendly funds can be applied toward other perks such as gym memberships or free lunches.
- Referral bonuses. If your firm is struggling to attract qualified workers, consider paying existing employees for every person who attends an interview via an employee referral. The existing worker might be offered a lump sum payment or even an allowance for each month the new hire remains on the job.
By being flexible and listening to your employees, you can generate many ideas for unique employee benefits. And the retention that results will benefit both you and your employees.
When was the last time you reviewed your insurance coverage? An annual insurance review makes good financial sense. Here are points to consider as you review your various insurance policies.
Health care – If you have an individual policy, investigate whether your employer, union or professional association offers a less expensive group policy.
Long-term care – Long-term care insurance may be advisable if you’re between the ages of 55 and 72 and you don’t have enough assets to fund long-term care.
Life – The protection you need depends on the number of people who rely on you for support. Whole, variable, and universal life policies combine insurance coverage with an investment future. If you want insurance only, consider term life.
Disability – Studies show that less than one in six Americans own enough disability insurance to provide a comfortable lifestyle during a two-year disability. Disability coverage is generally limited to 60 percent to 70 percent of salaried income. If you have adequate emergency funds, electing a longer waiting period for coverage to kick in will reduce your premiums.
Homeowners – With fluctuations in the real estate market, it’s possible that your home is now under- or over-insured. Coverage equal to the current replacement cost (excluding land), not its original cost, is advisable.
Auto – Liability insurance is a must, but consider dropping collision coverage if you can afford to repair or replace the vehicle on your own. Collision insurance is probably required if your car is financed or leased.
Umbrella liability – Personal liability coverage is included with most homeowner and auto policies. However, if you own substantial assets, umbrella coverage will provide additional protection at minimal cost.
Unnecessary insurance – Carefully examine policies with narrowly defined coverage (such as credit, travel, or cancer insurance). They often duplicate other coverage in policies you may already own.