Picture this: Your small business is thriving, and you’re wearing multiple hats.
You’re the CEO, the sales team, the marketing guru, and the bookkeeper.
But you’re at a point where you just can’t do it all alone anymore.
Sound about right?
Then it’s time to hire help to keep the momentum going.
BUT–before you post that job listing–let’s talk finances.
Request a Twelve-Month Trailing Profit and Loss Statement
So, you have a bookkeeper – that’s awesome!
But don’t just settle for a standard profit and loss statement.
Ask for a more insightful one – a trailing twelve-month P&L statement.
This document is your financial roadmap for the past year, with twelve columns showing your monthly performance.
Why is this crucial?
It’s like a time machine for your business’s financial health.
Analyze those columns, and you’ll start to see trends in your revenue, expenses, and net income.
It’s like reading an adventure story of your business’s financial journey!
Predict Your Business’s Financial Outlook for the Next Six Months
Now that you have this financial treasure map, use it to predict where your ship is sailing.
Look at the historical context it provides to make educated guesses about your business’s future performance.
What might impact your revenue or expenses in the next six months?
Write down your expected revenue, expenses, and resulting net income.
Evaluate the Impact of Adding New Hire Expenses
Here’s where the rubber meets the road:
You’re thinking about bringing in reinforcements, but what’s the financial damage?
Layer the projected expenses for your new hire onto that six-month financial outlook.
What happens to your net income?
Will it weather the storm?
This step separates the financially savvy decisions from the impulsive ones.
Monitor and Reassess Performance After Three Months
Fast forward three months.
You’ve made the hire.
Now, did your predictions match reality?
Dive back into your financial crystal ball (that trailing twelve-month P&L statement) and compare it to your actual results.
Are your key performance indicators heading in the right direction? Revenue up? Expenses down? Efficiency through the roof?
If things are looking good, you’re on the right track. And if not, it’s time to pivot.
Implement a 90-Day Probation Period for New Hires
Lastly, consider a 90-day probation period for your new hire.
It’s like a test drive before committing to a purchase.
Use this time to assess their performance:
Are they bringing the magic you hoped for?
Are they freeing up your time, boosting revenue, or wowing clients?
If not, it might be time to reconsider.
Remember, this checklist is your co-pilot, not your captain.
Consult with financial professionals and accountants to fine-tune your strategy based on your unique business circumstances.
We’re here to help you navigate the financial seas of your small business, one episode at a time.