You need to understand each aspect of your trades business to make sure you’re in control of the business and to be able to forecast and prepare for the future. Tradies often get the actual work done but the business financial side also needs attention.
Being the leader of your trade business requires time in all areas of the business – marketing, business development or finance. As your business grows, it can be overwhelming so you would need extra help. It’s important to know the financial performance of your business especially since this is why you created your trade business in the first place – to earn money. Analyse the financial health of your trade business so you can make informed decisions. Here’s how you can check the health of your trade business.
You can use financial ratios to understand the financial health of your trade business. This will give you a clear picture of your business finances. The current ratio measures whether the business has adequate assets to meet due debts. Formula is liquidity: current assets / total assets
The solvency ratio shows the extent to which your trade business can meet all debt obligations from all other sources aside from cash flow. Formula is solvency: total liabilities / total assets
Profitability measures the success of your business operations. Formula is profitability: gross profit / total sales
ROI: net profit before tax x 100 / equity shows you whether there is a positive return on the equity
A tradies accountant can help you calculate the ratios and explain the implications on your trade business with the industry trends. A tradies accountant can help tradies set goals and strategies to reach business success through forecasting, cash flow analysis, price improvements, company structure and cost reductions.
Benchmarks can also be used to analyse market trends and compare your trade business performance with your competitors.
Tradies accountants will also help you plan, budget and forecast with periodic reviews. We specialise in accounting, bookkeeping and consulting services for tradies and trade business owners. Contact us now.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
You can click here to speak to a business, accounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.
We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.
Sky Accountants Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Gisborne & Macedon Ranges
Phone: 03 97444522
Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437