Understanding Financial Statements

If you don’t understand your company’s financial statements, you’re at a disadvantage as a business owner.

For example: When you talk with your bookkeeper or CPA about financial reports and numbers in your business, do you know what she’s saying? Do your eyes glaze over?

Are you using your financial statements as a useful tool in managing for profit in your business? Or do you look at them and wonder what it all means?

“This thing shows that we’re making profit.  How come that number on the bottom line isn’t in the bank account? And what on earth is this Balance Sheet supposed to be telling me?”

If your tendency has been to avoid looking at your company’s financial statements, I encourage you to make an appointment to meet with your CPA or bookkeeper TODAY. They can be a great source of training, information and advice to support your company’s profitability.

A great bookkeeper or CPA is eagerly awaiting the opportunity to share her knowledge with you. Don’t wait until “tax time.” She’s too busy then. Do it NOW, when she has the space to walk you through and help you understand what all those numbers mean. Do you want to REALLY turn her on? Ask her to support you in creating projection tools for the future: Cash flow projections, profit projections and the like.

Side note: If your CPA or bookkeeper can’t or won’t do this, or if you leave your interactions with her confused, GET A NEW ONE.

Accounting is easy. It’s addition, subtraction and maybe a little multiplication and division. It’s not rocket science. Developing your ability to use numbers as tools greatly increases your prowess as a profitable, viable, business person. Invest in yourself. It’ll pay off forever.

 

2 Comments

  1. Judith October 27, 2015 at 5:44 pm - Reply

    Caryn,
    Thank you for these tips. Good advice.

    • Caryn October 28, 2015 at 11:15 am - Reply

      You’re welcome, Judith. Numbers can be powerful tools!

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