Do you look at the financial reports for your business or put off as long as you can?
You’re not sure what it all means.
You’re afraid if you ask for help, someone will think “How can she run a company?”
I was just like you. One day my accountant took me under his wing and taught me what all those reports were and how best to use them.
It gave me power.
It gave me knowledge.
It enabled me to grow my business to the point where it was large enough to be acquired—almost every business owner’s dream!
Now I’m paying it back with a quick and easy guide to the most important stuff and what it all means.
In less than 3 minutes you’ll understand all those reports hiding in the corner of your desk—I promise!
Dust them off, grab a coffee and let’s go!
What financial reports do you really need to look at?
Profit & Loss: Otherwise known as a P&L. What’s important here are sales, cost of goods sold (COGS—what it costs you to make your product), gross profit (what you’ve got before expenses), expenses (every other cost except COGS) and net profit (what’s left). In future posts, we’ll look at each of these in more detail (but not in boring accountant-speak).
Cash flow: While your P&L might make you think you’ve got money, the cash flow statement tells you what you need to spend, can spend and when. It shows how money (cash-even though it’s probably not actually dollar bills) is coming in and going out of your business.
Bank & credit card statements: Always good to keep an eye on. If you’re stretched for time, a quick skim is fine. You’re looking for unexpected, unauthorized items. Sadly, it’s incredibly easy for employees who have access to checks and credit cards to embezzle funds from you.
Payroll: Again, a quick skim to make sure you’re only paying actual employees and that their salaries are what you’ve agreed to.
How often do you need to look at them?
Good:Once a quarter. Make it a habit to review at least the items above and compare them against your budget (yes, you need one). If anything gets out of hand, not a lot of time has gone by so a small issue won’t become a major disaster.
Better: Once a month. Since bank and credit card statements are generally monthly and you know when they come in, just schedule 15 minutes in your calendar to take a quick look.
Best:Weekly. While this might take you a little longer in the beginning, once you make it habit and a weekly event in your calendar, it should be less than 20 minutes. The big advantage to a weekly look? You can deal with issues right away before it’s costing you big money. And if everything is going well, pat yourself on the back for doing a great job!
Less than 3 minutes to understanding your financial reports — right?
Easy — yes?
Boring — not!
For more tips or if you’d like some one-on-one time, just drop me a line. It really can be painless and profitable!
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