How Do I Read A Balance Sheet? Accounting for Entrepreneurs & Beginners

“I don’t do accounting, I don’t have the head for numbers.”
If you are a business owner you do not get to choose whether or not you are interested in accounting or have the head for it. It is a must, your financial education is a key success factor for your business.
Yes, hiring a trusted advisor; Accountant or Bookkeeper is a great idea. But, you cannot place 100% of the responsibility of reviewing and making business decisions in their hands. Who is closer to the ins and outs of your business than you? No one.
As a business owner you must be able to determine the pain points and successful strategies of your business. You find these answers by reviewing your Balance Sheet. The Balance Sheet tells the story of your business success and losses as well. Being able to navigate your way through the financial statements creates accountability for you to continue or discontinue certain strategies for your business.
• Cash flow is the heart and soul of your business and you must watch your trends closely to be able to make decisions sooner rather than later.
• Your debt load is critical to your success and ability to access future capital, like cash flow you must monitor your position period over period as will your lenders.
• Is all of this worth it? The common question I get asked by entrepreneurs is answered by understanding the equity section of the balance sheet.
You do not need a formal background to become financially literate to support your business, you only need to spend some time learning the key points to take away and understand to ask the right questions.
Check out the Intro to the Balance Sheet videos Part 1-3 on YoutTube. I guarantee you will takeaway some simple yet effective insight on how to review your Balance Sheet and ask questions to continue to build your success.
Stay tuned for the Income Statement series to follow!

Leave a Reply

Your email address will not be published. Required fields are marked *