Are you in the driver’s seat of your business?
Think back. Did you really understand what your company’s balance sheet, profit & loss statement, and cash flow report were revealing to you the last time you looked at them?
If your answer to that question was “What’s a balance sheet, and those other things you mentioned?” you are in danger of losing control of your organization. (If you answered, “Yes. Totally.” You are driving your business like a pro—read another article.)
Running your business without understanding the numbers is like driving your car blindfolded. By not understanding what the numbers are telling you, you are leaving yourself open to unnecessary cost overruns, and most often, insufficient cash to pay bills.
Believe it or not, all it really takes for you to understand what the financial statements can tell you is a bit of time and the understanding that you do not have to be a financial wizard to understand the reports. You just need a genuine desire to learn what the numbers are telling you about your business.
Spend some time with your accountant or a qualified business advisor.
This professional should be able to help you understand the fundamental importance of each of the financial statements, and how each impacts your business.
- BALANCE SHEET tells you at any given point in time what you own and what you owe
- PROFIT & LOSS STATEMENT indicates where your money came from and where it went over a period of time
- CASH FLOW REPORT tells when you will have cash coming in the door and when your cash will be going out to pay bills.
Ask yourself:
- Do I know what my financial statements are telling me?
- If so, what are they telling me about my profit margin, debt load and liquidity?
- Are my financial statements current?
- Am I confident that they are accurate?
- If I am uncomfortable with my understanding of the financials, who can I turn to better understand them?
Don’t be embarrassed if you don’t understand financial statements, many people don’t. Most people will not take the time to learn about them; but if you do, you will have gained better control of your organization. You will be in the driver’s seat again.
Copyright MCMXCVII – Liz Weber, CMC, CSP – Weber Business Services, LLC – www.WBSLLC.com +1.717.597.8890
Liz supports clients with strategic and succession planning, as well as leadership training and executive coaching. Learn more about me on LinkedIn!
