“When the bank asks for them. Otherwise, why bother? …It’s just a bunch of numbers on a page.”
Those were the precise words of a small business CFO in response to my question as to how often he generated financial statements for his company.
Prior to that, I had asked the CEO how often he reviewed his financials. To which he replied, “I’ve never seen them.”
You’re Busy
Let’s face it, other than single moms – or single parents in general – small business owners are the busiest people on the planet.
- Maybe you don’t feel you have the time to review financial statements.
- Or maybe you don’t have a CFO or other means of generating financial statements on a regular basis.
- Or maybe you do review them but you’re just looking at them from an historical perspective.
If any of these three scenarios apply to you, you’re deriving less than half of the value of financial statements – at best!
So, here’s a series of short videos to help you transform your financial statements into invaluable information that will give you greater insights into historical performance but, more importantly, a structure for proactively managing your company.
You Can Do This Over Lunch
You may have your bookkeeper or CFO make these adjustments but it is important that you understand them.
So just sit back, relax and watch these 5 short videos that will empower you to take mundane financial information and turn it into actionable data that you can use to proactively improve the performance of your company.
Here’s How to Gain Greater Control by Transforming
Financial Statements into a Foundation for
Proactive Management of Your Company
(All videos best viewed in full screen mode)
In this introductory video, I lay the ground work for how you can easily convert “a bunch of numbers on a page” into management segments that represent the way YOU see your company.
That’s why it’s important that YOU watch these videos.
You want your financial statements to tell you a story each month.
And you want them to tell you the story as YOU want to understand it.
Introductory Video – Structuring the way you want to see it
So now that we have the basics established, let’s take a look at…
An Example using COGs:
You see, the IRS doesn’t care how the financials are structured in this regard.
We have this discussion with business owners all the time. “But my accountant…”.
Your accountant’s job and main concern is to conform to GAAP.
The bottom line is – well, it’s the bottom line: as long as profit is accurately reported, you can structure your financials any way you want.
Oh, and another thing with regard to bookkeepers. They are not mind readers and they don’t necessarily understand the operation of your company.
So you might find entries for ‘Other’ or ‘Miscellaneous’ or new accounts set up for a misspelling of an old account. We’ve seen it all.
Don’t allow it!
You can’t manage to a ‘miscellaneous’ or ‘other’ expense.
When you get your financial statements structured to tell you the story of what’s actually going on in your company, you’ll want accuracy in everything that is entered.
So now that you have the hang of it, let’s look at a way to organize all of your operations in a way that every member of your team will understand which will provide…
The Foundation for Establishing Alignment and Accountability while Inspiring Engagement
You see, once you have a structure that everyone can readily understand, employees will have a better sense of how their performance impacts the performance of other team members and the company as a whole.
So now it’s time to…
Apply the Structure to Overall Company Operations
Again, this post was created to get you started on structuring your financials so that, rather than just conforming to tax requirements or a vague historical review of profit and loss, you can use your financial statements to proactively manage your company.
It doesn’t change the cost of entering the data – it just makes the resultant information more valuable for you.
And there’s more you can do with that information now that it’s properly structured.
For instance, let’s conclude by taking…
A Quick Look at Ratios for Greater Insights
Done
So there you have it.
A quick way to gain greater insights from the historical data residing in your Financial Statements and, more importantly, the foundation for establishing more effective budgets and performance metrics for the overall operation of your company.
Done for You
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