It’s difficult to comprehend, but there are some business owners that have no idea how their business financials operate.
Ever seen an episode of Shark Tank, Bar Rescue, or Restaurant Impossible where the business owner struggles to articulate financials, or doesn't know them? This stuff is for real. Many times, business owners and startups have no idea what’s going on behind the scenes with their financials. Why this can happen may be for many reasons, but don’t let this happen to you!
Whether you are just starting out or if you have been in business for a while, if you are not financially astute, it will be just a matter of time before it will haunt you. Business owners have a responsibility to take the necessary steps to fully comprehend their business's financials.
What do you need to know or what do you need to learn when it comes to financials? Though the complete list may be too long to mention in just one post, you can begin with some of the basics:
- Inventory Levels (if applicable)
- Costs & Margins
- Gross Margin
- Variable Expenses
- Fixed Expenses
While the world of financials can be complicated, don’t let it intimidate you. There is plenty of self-development sites and information online where you can learn at least the fundamentals. Of course, there is also the option of obtaining professional financial assistance as well.
However, don’t think the solution is just hiring someone to do it for you. While hiring a professional is viable a solution, and in some cases, advisable, you will still need to be engaged and ensure that you learn all aspects of your business's financials.
Bottom line is whether you decide to do-it-yourself, or if your source out to an expert, you will need to ensure to stay depth with the financials of your business until you are comfortable to articulate.
It usually never ends well if a business owner, when asked about their financials, states "I am not sure?"