How to Read Financial Reports as a New Business Owner
Jan 27, 2023As a new business owner, you may feel like you need to understand what each line and item number on your financial reports is for but I believe the key is to understand what question each statement answers for you.
I'm unpacking the profit and loss sheet, balance sheet, and cash flow statement. Think about it in terms of a weight loss goal; if your profit and loss are like a food and exercise log, your balance sheet is a weigh-in, and your cash flow is your metabolism.
"If it feels like the financial side of business is like eating your vegetables, well, then think of this podcast as the ranch dressing to make the process a little more enjoyable."
In this episode, you will learn the following:
- Uncover how to use financial statements to measure the health of your business.
- Learn how to assess the composition of your business and determine how to pay off your debts.
- Discover how to use a cash flow forecast to master your business's money metabolism.
What you'll hear in this episode:
- What is a Profit and Loss Statement?
- What does the balance sheet do?
- The P&L is like your calorie tracker
- The number one reason why most small businesses fail
- Plan ahead for what’s coming up.
- When you’ve isolated what you want to improve, you can change certain behaviors to improve it.
Here are some brief snippets from this episode:
[00:00:50]
For most business owners, financial statements seem like a whole new language. This episode will unpack the profit and loss statement, the balance sheet and the statement of cash flows. We'll talk about them in terms of what they tell you, not what is on them.
[00:06:21]
balance sheet measures liquidity, how cash strong are you? How quickly can you convert to cash? Solvency is how well can you pay off your debts with the assets that you have. Statement of cash flows measures what I call your money metabolism. There is nothing more powerful, in my opinion, than a cash flow forecast.
[00:13:22]
Shannon Shannon Weinstein: Show up every day with the intention of creating positive cash flow. She says understand how to read your financial statements in terms of what they're telling you. With intention, you can change certain behaviors to improve those areas, she says.
Related episodes:
197. Manifestation Mastery with Angela Christian
200. Setting and Exercising Effective Boundaries with Woodrie Burich
205. Lessons From 120 Women Leaders with Julia Boorstin
Resources:
Find everything you need at www.keepwhatyouearn.com! https://www.keepwhatyouearn.com/
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
