Generic personal financial statement template, Financial Statements are a set of statistics and scores not unlike the scores and statistics which show up after a sports game. For a sports team owner or supervisor, the statistics, replays, opinions, and the rating, are a very important part of analyzing, tweaking and improving the game. They’d never ignore them. It is their way of increasing the success rate. By comparison, company owners and managers, more often than not, it appears, see their financial statements as a necessary evil to satisfy the I.R.S.. They either are totally unaware of the power of those reports, or they simply choose to dismiss them. Many small business owners are delighted to turn the accounts to your bookkeeper or accountant to analyze.
So, what’s wrong with that? Well, for starters, even when the company owner doesn’t utilize the financial reports as an instrument, profitability is based more on luck than strategy.
Take forecasting the profitability of the company for example. Without understanding of previous performance, how do you produce reasonable funding amounts? When done properly, there will be two components, historic performance and growth projection. However, if you do not clearly know what’s going on in your business, what minor or major changes will you make? Do you’ve got the ideal combination of staff? Are there any product lines which aren’t profitable? Is your pricing right? How about your overhead, can that be enhanced or is it in line with industry standards? How do you improve your score? Do you know when there is a black hole draining your profits?
Then, there is the control issue. Who’s controlling your small business? Do you’ve got controls in place? From experience, I will tell you that when the owner does not know what’s going on with the financing of the company, there is ample room for corruption. Would you know if somebody was stealing from you? Sometimes it is small seemingly insignificant skimming and other times it’s similar to grand theft. It happens all the time and the company owner is often totally unaware.
You’re able to get better results if you’re able to make an analysis of different things in a better way and know how things will affect considering previous years tendencies. In fact pro forma financial statements serve as the foundation stone of making things crystal clear and very based on the requirements of your company in the coming days. That’s why this report is utilized as the base of analyzing and comparing different types of information. So you may find a feel to handle the matters in a much better and effective manner.