The Search for a Survival Guide for Business Owners
There is a well known truth that when someone becomes a business owner, one of the first tools of the trade is a shoe box. It doesn't have to be a name brand box, any name will do. The importance of that shoe box to the business owner/entrepreneur is that will be the new home of all their business receipts. Frankly, it is so common to accountants that they chuckle when the topic is brought up. In the spirit of full transparency, I must admit that when I first started my business, I used a shoebox to store my receipts. Okay, you can chuckle now, I do, when I think back to that time. The challenge for individuals who start their business isn't that they don't have a vision, nor an action plan, it's that they don't even give much thought on the financial aspects of tracking "the numbers". If you can relate, realize you are not alone. As their business continues to grow, the financial aspects still linger in the background. A quite familiar saying of business owners and entrepreneurs is, "As long as I have money in my business account, that's all that matters!"
Accounting for the Numberphobic: A Survival Guide for Small Business Owners
A book that would have been incredibly helpful when I first started out, let alone as I was growing my business, would be Dawn Fotopulos's book. It is a survival guide for any business owner, new, or seasoned who hasn't refined the "numbers/accounting" part of their business as much as the other parts of their business. It is a great tool that you can use to assist you in surviving in today's competitve marketplace. It provides solutions to the challenges that face business owners. What challenges? The challenge of why so many business owners dread looking at the numbers. Why don't they have financial statements, ledgers and profit and loss reports?
To provide a helpful overview for those who may be financially inexperienced or need a gentle push, I've crafted a concise summary of key takeaways in bullet point format, which I hope will inspire you to prioritize these essential financial tasks in your business journey.
Importance of understanding financials: The book emphasizes that small business owners need to understand their financial statements to make informed decisions and ensure the success of their businesses.
Financial statements: The book provides an overview of the three primary financial statements - Profit and Loss (P&L), Balance Sheet, and Cash Flow Statement - and explains how they are interconnected.
Profit and Loss (P&L) statement: The author explains the P&L statement, which shows the business's revenues and expenses over a specific period, and how to use it to assess the company's profitability.
Balance Sheet: The book covers the Balance Sheet, which provides a snapshot of a business's assets, liabilities, and equity at a specific point in time, and how to analyze it to understand the financial health of the company.
Cash Flow Statement: The author breaks down the Cash Flow Statement, which shows the movement of cash in and out of a business, and explains its importance for managing liquidity and ensuring solvency.
Financial ratios: The book introduces various financial ratios, such as profitability, liquidity, and solvency ratios, which help in assessing the performance and stability of a business.
Budgeting and forecasting: The author explains the importance of creating budgets and financial forecasts to plan for future growth and manage cash flow effectively.
Cost control: The book emphasizes the significance of monitoring expenses and controlling costs to maintain profitability.
Pricing strategies: The author discusses different pricing strategies and how to set prices that maximize profit while remaining competitive.
Financial warning signs: The book highlights common financial warning signs that business owners should watch for to identify potential problems early and take corrective action.
Stephanie Burns, Founder of Chic-CEO has helped over 100,000 female entrepreneurs start a business. She is a big believer in Dawn's book and has put her words into practice and encouraged others to do the same.
The bottom line is that, "Accounting for the Numberphobic" simplifies complex accounting concepts and provides practical guidance for small business owners to understand and manage their finances effectively. It is my genuine hope that this blog post accomplishes two things: First, that you will put away that shoe box. Second, that it motivates you to obtain a copy of the book and actively implement the suggested strategies, setting you on a path to success.