22 Nov FINDING YOUR WAY WITH FINANCIALS
A journey is the act of traveling somewhere – as the adage says “life is a journey”. Being a business owner let’s take that to one step further – “business is a journey”.
Business is always traveling – forward, backwards, sideways or maybe even upside down. But it’s traveling….
As a business owner myself I wake up every day waiting to see what journey lies ahead. It changes day to day and it definitely is not boring. But as business owners we hate waiting around to see what will happen – we want control!
So how do we embrace the journey? How do we as business owners take control of the journey our business is on, not only for ourselves but for our employees and customers?
Take an Elevated Approach:
My answer to so many of the questions I get asked from my mentoring clients also stated in my last blog – “you need complete visibility to make informed decisions”. In business that visibility comes from your financials.
What are the financials to the journey? They are your financial GPS. They tell you which direction to take – do you need to take a right or a left? Your financials tell you where you need to go and the information of how to get there. Without them you are traveling blind.
I have been told time and again by our clients that they know they should be printing their financial reports. They know they should be reviewing them on a regular basis, but they feel it is a waste of time since they really don’t understand them. That tells me a assortment of things all of which can be remedied – they have not been trained how to properly read their financials, they’re printing their statements off in financial accounting format, they are not departmentalizing or a combination of all of the above.
Financials can be overwhelming if you don’t understand what they are telling you. They are a whole bunch of accounts and numbers that are supposed to match, but ultimately tell you how much money you spent and made.
They really are much more than that.
Take One Step at a Time:
Financials – why do we can them “financials”? Because there are two of them, not just the Income Statement, as most companies would believe and base their decisions off of. There is also the Balance Sheet or the “forgotten statement” as I refer to it as.
The Balance Sheet gives you a snapshot of your business for a specific point in time. How much do you own and how much do you owe. You should be looking at this statement at least once a month. Verify the accounts are being used properly and that you know what are in all of the accounts.
The Income Statement gives you a snapshot of your business for a specific period in time. How much did you make and how much did you spend. You should be looking at this statement at least once a week. Verify the accounts are being used properly and that you know what are in all of the accounts.
Notice that the last two sentences of the previous two paragraphs are exactly the same – why is that? It’s because both of your “financials” are critical to running your business, they both contain information you not only need to know but need to manage.
Going on a journey can be amazing if it is done correctly! Make sure you are prepared for your business journey, use all the tools you have available to you to create an unforgettable adventure!
We are here to accompany you on your journey. We can mentor you one on one or you can join us in one of our Seven Summit Series training’s. Learn more about us at www.appliedmg.com.Join the Seven Summit Series Journey