It all starts with good bookkeeping. If you don’t have good, current financial statements, then make that your number one priority. Without solid financial statements, you can’t make good decisions about your business. You won’t know what is working and what isn’t. And without the financial statements the following advice won’t really make a lot of sense.
In school, you received a report card. It showed some numbers or letters that supposedly said how much you were applying yourself in school and how good you were at taking tests. Based on those report cards, you received accolades, scholarships, or labels that haunted you the rest of your school years, and possibly even beyond. Yet, when school was over, no one really cared about your report card.
In business, the report card has been replaced with your financial scorecard. There can also be a social cause barometer attached to your business scorecard. This would measure how you impact other cultures, people’s situations in life and the environment.
Get your Financial Statements to Talk to You
Start by obtaining your most current set of financial statements.
If this is the first time you go through the process, you will likely have only half of the information available. Often the story of a business isn’t so much where the business is today at a fixed point, but the direction it is taking.
For example, if you saw two identical financial statements for competitors, you really couldn’t tell which one, if either, would survive or maybe even thrive. You could tell what problems they might soon be facing, but you don’t know the full story until you see the history of the financial statements.
That’s where you see the proof of what will be happening with the business. If two businesses are the same, and one is on the increase and one is on the decline, which will be stronger? You could only know that by comparing the current information with the past information.
Start off with noting the time period you will be comparing. You may want to look at this monthly or quarterly. Doing the review annually is a good start, but, ultimately, you will want to watch it more closely than that.
As a business owner, your time and attention should be focused on creating an investment model that makes money- and this is where the information provided on financial statements will serve its purpose.
Unfortunately, rather than interpreting the information on financial statements, many business owners dedicate their valuable time and resources on creating them. This is a waste of time and money.
Learn what Cash Flow Accounting can do for your business. We will prepare personalized financial statements and will teach you how to use our unique “Stats at a Glance” online program—allowing you to interpret your company’s financial information to determine your next business move. Contact us at Info@CashFlowAccounting.com ; we will save you time and money.