Four Business Trends To Keep Your Eye On

As a business owner, you should be running reports at least monthly. This includes your Cash Flow Statement, Income Statement, and Balance Sheet. Each of these reports summarizes your company’s financial performance and business activities during a set period of time. Over time, you’ll begin to notice trends in these reports, which reveal vital information on your company. There are four patterns to keep your eye on, and these include seasonality, business cycle, debt obligations, and any excess expenses or budget bloat. 

Seasonality

How does your business change from season to season? You’ll notice over time if your business has high seasons or low seasons, and from there, you can adjust your business plan and goals accordingly. Seasonality refers to the four seasons year round, but also the holidays. For example, if you make fewer sales in the winter, you can plan to buy lower inventory, therefore saving money during a downtime. On the flip side, you’ll be able to determine your busy season and plan accordingly. 

Business Cycle

Financial reports will show you your company’s business cycle. Your business cycle is essentially the ebbs and flows of your business over time. As the economy expands and contracts, your company will be forced to adapt. You’ll notice highs, lows, recoveries, and declines. 

Debt Obligations

Keep an eye on your debt obligations. These financial statements will break down your debt obligations during a set period of time with a detailed look at accounts payable and any money owed via promissory notes or exchanges of bonds. Is your debt growing over time? How can you minimize it? By analyzing these reports and your debt obligations over time, you’ll be able to plan for a re-payment schedule and more.

Expense/Budget Increase

Take a look at your expenses and your budget - are these growing? In business, we call it “budget bloat,” but it means you are spending more money than you originally forecasted or budgeted for. Why is this happening? Make note of why this may be happening and keep track of it moving forward to help determine if you need to re-evaluate your current budget and expenses. 

For help pulling or analyzing your financial statements, contact your trusted accountant or bookkeeper. If you do not have one, reach out to Skynar Bookkeeping Services for assistance!