Fit Finances: building success with numbers
It may feel like it snuck up on you once again, but the holiday season is on all around us. As you gear up for the holiday hustle in your studio with special offers and membership incentives, be sure to also allow time for winding down of 2023, evaluating what worked this year and what didn’t, and allow space to focus on your future business planning.
Dust off that 5-year plan and see where you are, and if the plan is still realistic. Whether you're dreaming of a grand exit or planning to ride the entrepreneurial rollercoaster a bit longer, there's one thing you can't afford to overlook: the importance of timely and well-organized financial statements.
I hear you. Accounting is boring, and financial statements are backwards looking. Where is the fun in that? I say that even as a 30+ year accountant! But getting this right at the end of year is so important…so hear me out, especially if you are in the grand exit camp.
Why are organized (and timely!) financial statements so important? Let’s discuss three of the biggest reasons.
Captivating Potential Buyers
Your studio numbers tell a story. Imagine that your business is the lead in a blockbuster movie, and potential buyers are the eager audience. Crystal clear and organized financial statements provide the plot, and if they are jumbled up and hard to understand, the story falls apart. Well-organized and timely financial statements signal professionalism and stability to your potential buyers, as well as an in-depth understanding of your business. Both will help to cultivate confidence in potential buyers considering an investment in your business.
Strategic Decision-Making
Organized financial statements provide a roadmap for strategic decision-making. When your studio’s financial data is easily accessible and understandable, it empowers you as the business owner as well as a potential buyer to make informed decisions about the next best steps on the path to growth, investments, and operational improvements.
Compliance and Due Diligence
Especially relevant during the sale process, organized financial statements indicate compliance with accounting standards (crucial if bank financing is involved) and facilitate making the due diligence process so much smoother. Due diligence can be tedious, and your buyers will appreciate a transparent and well-documented financial history, reducing potential concerns and moving the transaction toward the finish line. And you will appreciate being asked significantly fewer questions when your financial statements are clear in the first place.
As you contemplate the possibilities for your business in the new year, investing time and effort into organized year-end financial statements is a strategic move that will save you time and likely make you more money in the long run, when you are ready to exit. These documents not only showcase the financial health of your studio but also position you favorably in the eyes of potential buyers. It still may not be exciting, but by taking a proactive approach to financial management, you're not just preparing for a sale but laying the groundwork for sustained success. Remember, clarity in your finances is not just a business necessity; it's a powerful tool for informed decision-making and future growth. Your studio is worth it!
