In the fourteen years’ experience I have in accounting, tracking your numbers is key if you want to be in business.
I have been in business for seven years and I know first hand how beneficial it is to know how my company is performing.
I have been invited by organisations such as the Barbados Youth Business Trust, the Youth Entrepreneurship Scheme, Barbados Cultural Industries Development Authority to speak on topics dear to entrepreneurs.
These would include, “Types of Funding”, “Understanding the Financials” and such the like. I have also been afforded the opportunity to consult with entrepreneurs on a one on one basis guiding them on how best to communicate the present performance of their business and how they anticipate their business will perform in the future.
Here are four reasons why you need accounting information:
- To know the past performance of your business
- To know the present performance of your business
- To predict the future performance of your business
- To make informed decisions for your business
Not only do you want to make your numbers presentation ready for your benefit, but for those outside of your business. These include government agencies such as the Barbados Revenue Authority (or the relevant tax authority in your country), lending agencies and investors, to name a few.
What are the key financial statements a business owner should pay attention to?
- The income statement
- The balance sheet
- The cash flow statement
The income statement shows whether the company has made a profit or a loss.
The balance sheet communicates the net worth of your company.
The cash flow statements shows the money flowing in and out of your business for various purposes.
As stated above, having access to these statements helps you became more aware of the transactions in your business. It could also help decide if a particular product line is making money or not. It could also help you know if you should give up the place you’re renting which is eating up your cash flow, so you could opt to work virtually and provide the same level of excellent service online.
So how does one create these financial statements? By tracking your numbers one business transaction at a time.
You could opt to purchase accounting software.
You could opt to use free accounting apps.
You could opt to hire the services of a bookkeeper or an accountant who could help input this data so you could become well informed. (Hint Hint)
Accounting software has become user friendly that anyone could use it. However, having someone on your team who understands basic accounting principles and knows how best to make this information presentation ready and how best to explain your business’ performance to you, could make your life a whole lot easier and help you see the bigger picture.
If you would like get your know numbers better, send me an email at firstname.lastname@example.org or call me at 246-231-1385 and let’s get you seeing the bigger picture NOW.
Melinda Belle is the visionary and founder of Astrape (As-strap-pay) Finance Inc., the caring, knowledgeable, trustworthy, financial company guiding you to financial stability and prosperity through education, sound planning and advice. Melinda sees her role as that of an architect and is committed to the shaping of financial landscapes of businesses.
EMAIL her at: email@example.com
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