Most of us were not born reading profit and loss statements, cash flow statements, and budgets. In fact, most of us who start our own home based businesses may not have really had the opportunity to work with detailed financial documents much in our previous life and it may seem incredibly daunting now that we are responsible for this fledgling company’s financials. It is possible to learn, however, and I do believe that anyone can get comfortable and savvy reading and understanding financial documents.
For most of our small businesses, there shouldn’t be a lot of financial statements to contend with. There will be tax returns and documents, regular checking and/or savings accounts, annual and other budgets, and probably profit and loss statements and basic financial statements that we might provide to a bank or lender or use for our own purposes. The exact way that these documents look will depend on what sort of computer programs we use, who is doing the bookkeeping (and how) and what is the purpose of the reporting. My best advice to you is to practice–instead of balking and avoiding looking over your finances, get comfortable by looking them over, experimenting with your bookkeeping software, and learning the ins and outs of what all of the numbers mean so that you will be comfortable reading the information on the documents.
If you are paying close attention to your business finances, you will KNOW what is going on with your books. They should simply report what is going on and not necessarily be shocking or surprising to you. I know with my own, however, that I periodically will pull reports ( I love graphs and charts) from my bookkeeping so I can see better what is happening with things like cash flow (comparing income and expenses during a certain period of time) and where the money is actually going (expenses) and all the places it is coming from (income or revenue.) If you have questions, ask your financial advisor or find a mentor or colleague who can give you a tutorial. There really is no excuse for a business owner NOT to have a grasp on the business’s financials.