Financial health isn’t just about profit. It’s about knowing where your money’s going, how long it will last, and whether your business can handle unexpected bumps in the road.
Here are 3 simple ways to check your business’s financial health.
How Do You Check a Business’s Financial Health?
1. Understand Your Cash Runway
Your cash runway is how many months your business can continue operating at its current pace before funds run out. It’s especially important in industries where income isn’t always consistent—like project-based creative work or early-stage startups.
Quick check:
Take your current cash balance and divide it by your average monthly expenses.
Cash runway (months) = Current cash balance ÷ Average monthly expenses
If the result is less than 3 months, it may be time to revisit your income planning, cut unnecessary costs, or explore support options like grants, loans, or R&D tax relief.
2. Are You Setting Aside Enough for Tax?
Unexpected tax bills are one of the most common causes of financial stress for small businesses. If you’re not setting aside money for Corporation Tax or VAT, your finances may be more fragile than they seem.
Quick check:
Are you setting aside at least 20–25% of your profits into a dedicated tax account?
Recommended Tax Savings = Profits × 0.20 to 0.25
If not, start automating transfers into a separate “tax pot”—it’s one of the simplest ways to protect your cash flow.
3. Do You Know Your Break-Even Point?
Your break-even point is the income you need to cover all your core expenses—including your salary.
Break-Even Income = Fixed Business Costs + Owner’s Salary
If you’re not meeting it consistently, you might be undercharging, overhiring, or relying too heavily on unpredictable income.
Check Your Business Financial Health Today
Financial health isn’t just about balancing the books—it’s about making smarter decisions for the future.
Don’t get caught out by unexpected costs. At Atek, we review your business processes and provide proactive advice, so you can make confident, well-informed decisions.
Get in touch today to review your financial health and start building a stronger, more effective strategy for the future
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