The Key to Business Success? Understanding the Numbers!

Regardless of whether you've been in business for years or just starting up, having accurate financial statements - and understanding what the numbers are telling you - is a must for sustained growth and success.  

Accurate financials are essential for determining any of the following:

• Financing readiness.  Any serious commercial lender or potential investor will demand a credible set of financial statements.
• Opportunity readiness.  Knowing how to best prepare to take on a substantial amount of new work, a new contract or a new project.
• The types of credit terms the business can afford to offer.
• Whether it’s time to adjust your pricing.
• What targets might be realistic in reducing the costs of doing business.
• How the business stacks up against its peers in its industry.
• Which services, products - or customers - are the most profitable, and which ones the business should let go of.
• Whether additional offerings might lead to better profit margins.
• How prepared the business is for emergency financial needs, such as unexpected repairs.
• Whether receivables are lagging and require attention.
• Which financial numbers in YOUR business are the most important for you to stay on top of on a regular basis.

Your business is an investment.  You cannot afford not to know how that investment is doing financially on an ongoing basis. It is without question that having an ongoing - and not just a year-end - relationship with an accountant who can help maintain the accuracy of your books and generate your firm’s financial statements on a monthly or quarterly basis can pay for itself in terms of increasing a business owner’s ability to make smart and timely business decisions.

For small businesses, accuracy in maintaining the following financial statements is of critical importance:

• Profit & loss statement.  If sufficient detail can be captured in the firm’s record-keeping system to determine profitability by separate service or product lines, or even by customer, so much the better.
• Balance sheet.  Understanding the business’ assets, liabilities and owners’ equity.
• Statement of cash flows.  As the saying goes, “Cash is King.”  A statement of cash flows provides clarity in understanding how cash comes into the business and how the business pays its expenses and debts.

I also recommend cash flow projections to estimate whether money will be available to pay for business operations when needed and for advance planning for potential cash shortfalls.

Need help with getting the most out of your business’ financial records?  Our business consultants at the FSBDC are here to help. The SBDC has 250 consultants and 40 offices in Florida.  The newest addition to the SBDC network is the North Central Florida office.  Our confidential consulting is available at no charge.  Please call us (386-362-1782) if there is any way we can help you start and grow your business.

The SBDC in North Central Florida has started offering monthly business workshops and they have been well attended.  The next workshop will be held on September 30^th and will cover “The Business Plan.”  Please call for more information.

Paul Arrington worked at the U.S. Small Business Administration for over 20 years and worked his way to become District Counsel in the SBA Jacksonville District Office.  In 2006, Paul became the Procurement Technical Assistance Center Manager at the Jacksonville Regional Chamber of Commerce where he helped businesses get contracts with governmental agencies.  Paul joined the SBDC at UNF in 2008 to become a Consultant and Director of Micro Enterprise Development.