If you’re going to grow your business significantly, you need to understand how your business is spending money. Know where every financial dollar goes. You need to fully know the direction you are headed and what you need to do to perform successfully in each quarter. It’s important to know and understand the financials of your women's business.
Many businesses are currently operating without correctly recording the financials coming in and going out of the business. In order for any business to succeed, the health of the financial records must be in good standing.
According to bizfilings.com, "Poor financial management is one of the leading reasons that businesses fail. In many cases, failure could have been avoided if the owners had applied sound financial principles to all their dealings and decisions. Financial management is not something that you can leave to your banker, financial planner or accountant—you need to understand the basic principles yourself and use them on a daily basis, even if you plan to leave the more complicated work to hired professionals."
The key elements to the financial business plan of your startup or existing business are:
- Income Statement – This statement documents the income coming into your business and should identify the difference sources paying you.
- Cash Flow Projections – A Cash Flow Projection statement is a document that identifies in advance what you expect your business will do during a particular period, e.g.: one year layout of expenses per month.
- Cash Flow Statement – The Cash Flow statement is an ongoing document that you should use to track your month to month expenses.
- Balance Sheet – The Balance Sheet lets you know what your assets and your liabilities are, and how they compare to each other. This statement also calculates your networth.
- Profit and Loss – The Profit and Loss statement summarizes the company’s revenues and expenses and compares them on year to year basis.
- Break-Even Analysis –The business’ break-even analysis determines the minimum amount of revenue the company must have in order to continue operations.
Prioritizing the referencing of the business financial plans is useful to every business owner and takes a lot of fear and anxiety out of your life so you can do what you love to do, which run your business. Knowing what questions to ask about the finances of your women's business and how to get the information you need. You will continue to utilize the knowledge of financials as a reference and resource throughout the life of your business.