Business Financial Statements for Small Business Owners


Today you’re gonna learn about
business financial statements and why you need to care about them for your
business. Hi, Paul Monax here of AgileWealth.com where I help small business owners understand
the money and finances in your business. Now there are many financial statements
out there that accountants create. And all the big corporations that report their
numbers to wall street have many more because the SEC requires them, but we as
small business owners for us really there’s only three. Three big financial statements that we
care about. The big three the balance sheet income statement and statement of cash and that’s it just those three. Those are the three that you need to care about as a small business owner. You can either create them yourself or
you can have your bookkeeper or your accountant do it for you but you need to be doing it on a periodic
basis whether it be annually quarterly or what i recommend especially
in the beginning is that you’re doing it monthly every single month you need to
be looking at the financial statements in your business so you can know how
your business is functioning and cut any kind of issues or problems, nip them right in the bud early If you wait for a whole year and only
review your financial statements every single year then some could have been an
issue or a problem for a long time before you figure out that it’s going on and
because every single business is unique the numbers that the story in your business tells you it is going
to be unique is well you need to be looking at that on a
regular basis monthly is what i recommend to see what your business is
doing how it’s going what kind of sales you’re doing what kinda expenses you’ve
got how is your cash looking and your Cashflow. Are you profitable? You compare that to the previous period last month last quarter last year to see if you’re making improvements
year over year or whether you’re going to the wrong direction and your
businesses bleeding cash from month to month.
If your business is bleeding in cash from month to month then the Statement Cashflows is gonna tell
you that. It’s going to tell you what’s going on with your business and if you’re cash flow positive which any business
that’s gonna succeed over the long term Must be cash flow positive if you’re losing money you’re losing cash every month, if your
cash is going down every single month or every other month your business is gonna not exist it’s going to go out of
business because your business can’t function properly if you have a decrease in cash flow from month
to month to month The same with your Balance Sheet and your Income Statement.
statement They’re all going to tell you different
stories of your business from a different perspective in a different
picture There gonna give you when you look at them in total,
in whole that three of them together the balance sheet, the income statement and
the statement of cash In total the picture that they
show you is gonna be pretty accurate reflection of how your business is doing and whether or not it’s gonna survive
and stay in business for the long term or whether or not your business is going to be out of
business, because you’re spending more cash than is coming in Or you’ve got higher expenses than your
income is coming in. Now I know those sound kinda similar but they’re not. Income and cash and not the same thing. If you’ve got, you’re generating a lot of sales
but people aren’t paying their bills you’ve got a big amount of receivables on your books then you’re going to go out of business
because you can’t pay those bills because you don’t have the cash. You might have the income but not the
cash So, you gotta look at them in conjunction as a
whole all three pieces are critical elements to whether or not
your business is functioning properly and once you figure out how to read
those statements it’s really straight forward the format is the same
month-to-month every single month you get the same format for each of them the big three financial statements and
you can look at them and it’s really quick to tell whether things are better or worse than
they were in the previous statement the previous period.
Okay so if you found this video helpful for a better understanding of the money and finances
in your business and you want more, then head on over my website at AgileWealth.com/m12 and register for a free download. The link is straight down
below the video here. You can go check out and download a package that I put together that’s got examples,
templates and more videos on understanding the finances and the
financial statements of your business. It is absolutely critical for the success
of your business for you to understand how the money and finances work so get
the education you need just click on the link down below and go to AgileWealth.com/m12 and get that free download. Thanks a lot and
Have a prosperous day

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