10 Financial Yardsticks For Your Small Business

This used to be more common: a business would do monthly payroll, and do a payroll advance mid-month. If your company does this, the advance does not show up on the profit and loss statement (again, on the balance sheet as a prepaid asset). So, be careful about when you are looking at statements. The profit will be high (and cash low) after the advance, but will correct itself when payroll is run.

Work out and keep an eye on both your fixed assets and current assets, this will allow you to see what short term (current assets your business has – such as stock) and what fixed assets your business has – such as property.

A business owner should work on high priority task first if not he or she can never be successful. He or she should delegate routine tasks such as answering phone, email, opening mail, bookkeeping, stuffing envelopes, errands like bank drop etc,. These tasks are low value and will kill productivity.

Start thinking about a loan for your small business now, don’t wait until the last minute. Plan ahead. Forecast a cash flow examples for the upcoming six months and revise it at the end of every month. If it looks like you’ll need a cash infusion three months down the road you can start applying for the loan now and not run into a cash crunch.

INCOME STATEMENT: also called the Profit and Loss Statement, or P&L, or Statement of Operations. This is a report that shows the changes in the equity of the company as a result of business operations. It lists the income (or revenues, or sales), subtracts the expenses and shows you the profit J! (Or loss L.) This report covers a period of time and summarizes the money in and the money out.

First, understand the income or profit and loss statement is not the same as cash flow. These are valuable analytical tools but only measure performance at a specific moment in time.

The responsibility for managing the household expenses should fall into the hands of the party with a better understanding of common sense financial management.