Business Connection: Managing by numbers
By Andrea Testi
Monday, November 2, 2009 10:52 AM PST
In many circumstances, owners and managers of small businesses lack the ability to analyze and evaluate the financial condition of their business.
While most of the clients we work with at the BizCenter come to us with an in-depth knowledge of the specific industry they are running, many don’t have an understanding of basic accounting and financing and don’t know how to manage their business by the numbers.
There are three key financial statements that business owners need to learn how to interpret in order to see the big picture of what is going on with the financial management of their business:
The Balance Sheet: A snapshot of the assets, liabilities and net worth of the business on a particular stated date, indicating the financial health or illness of a company at a specific point in time.
The Income Statement: It tells you if you made a profit or a loss for a specific accounting period. The statement contains income, cost of goods, operating expenses and other income/expense data.
The Statement of Cash Flows: It answers the question: Where did the profit and cash go? It reflects where the money came from and how the business spent it.
Running a small business is demanding. Business owners need every tool at their disposal to be successful.
Good financial information is an extremely powerful tool as long as you understand the relationships between the numbers and how to use them to run your business successfully.
The TVCC BizCenter advisory team is ready to work with you to improve the performance of your business.
We offer a two-pronged approach — independent learning coupled with business advisory.
Start by working through this excellent Financial Management Basic Toolkit, http://bizcenter.org/Toolkit/10893/4/11, one of many topical toolkits available at the bizcenter.org Web site. In this toolkit, you will find a collection of resources to help you understand the components of financial statements, calculate your break-even point and make decisions on analyzed financial data. Each toolkit has three components:
A lesson — which provides specific information about the topic you have chosen.
Learn More — an article, a Web site, a free online training and a book to enhance your knowledge.
Connecting To Your Business — a worksheet to help you apply the information to your business.
Once you complete the assignments, contact the BizCenter, (541) 881-8822, ext. 356, bizcenter@tvcc.cc, to schedule an appointment to discuss and apply this information to your business. We look forward to hearing from you!
Andrea Testi works at the TVCC BizCenter. The opinions in this column are not necessarily those of the Argus.
