Annual income statement template, Financial Statements are a group of statistics and scores not unlike the statistics and scores that show up after a sports game. For a sports club owner or supervisor, the statistics, replays, opinions, and ultimately the rating, are a very important part of assessing, tweaking and improving the game. They would never ignore them. It’s their way of climbing the win rate. By comparison, company owners and managers, more frequently than not, it appears, see their financial statements as a necessary evil to fulfill the I.R.S.. They are totally unaware of their ability of those reports, or they just choose to dismiss them. Many business owners are delighted to turn the accounts over to a bookkeeper or accountant to analyze.
So, what’s wrong with this? Well, for starters, once the business owner doesn’t utilize the financial reports as an instrument, profitability is based more on luck than strategy.
To be aware of the status the way your company has been doing during the year is another important factor and you have to keep this element in mind as well. In case you’ve been operating your company for quite some time, revenue and revenue amounts are important things that you need to consider. It is possible to get different types of statistics and figures and know the impact of things in a whole lot better way.
Afterward, there is the control problem. Who’s controlling your small business? Do you have controls in place? From experience, I will tell you that when the owner doesn’t understand what is happening with the finances of the business, there is ample room for corruption. Would you know if someone had been stealing from you? Sometimes it is small seemingly trivial skimming and other times it’s similar to grand theft. It happens all the time and the business owner is often totally oblivious.
The solution is for the business owner to become knowledgeable in the financial aspects of the business. This does not imply that they need to become a accountant. But, it’s critical that they become knowledgeable of the accounting model set up. They ought to understand the language. Business finance isn’t any more difficult to comprehend than most other aspects of running a small business. It is probably less difficult than some facets. The three most important financial reports are The Balance Sheet, The Income Record and The Cash Flow Statement. The most important Key Performance Indicators are contained in these 3 reports. It’s a cake walk! Are financial statements that your friend or foe? Friend, definitely buddy! Take the luck from adulthood.