Four Key Reports Every Business Needs
Business finances can be daunting and they can be difficult to get your head around. Looking at reports, spreadsheets and forecasting isn’t everyone’s cup of tea. There’s also a lot of jargon, and of course lots of numbers so it’s no wonder many business owners find finance and planning overwhelming! Our aim is to get you looking at your business finances in a new light, so here’s our jargon-free (well as much as it can be) guide to the four key reports every business needs.
As a business owner, it is important not to lose sight of your business numbers. The data they provide is crucial in helping you understand what your business is telling you. Without them, you’ll find it difficult to plan ahead. Think about it; if you don’t know where you are now, how can you predict where you will be in the future? If you don’t know where you might be in the future, how do you know how much you can invest, save or spend on crucial items?
To keep things straight in your business (and in your head), we suggest compiling four reports.
The first two you need are reports that look to the past and say
“What has happened in my business?”
1). Profit & Loss Account
The first one of these is the Profit and Loss Account. This is a detailed look at the things your business has earned or spent in the period under consideration. It’s here you will also need to include things that you have committed to (for example an advert in a newspaper) but have not yet paid for.
2). Balance Sheet
The second is the Balance Sheet. This is a measure of exactly what the worth of your business is at any one date or point in time, typically the end of the month. It includes who owes you money, whom you owe money, and where the cash is hiding in your business.
If you have a computerised accounting package these reports will be readily available to you. When you run them, take a moment to ask what your business is trying to tell you. If you don’t understand, or it doesn’t feel right, talk to your bookkeeper or accountant, or come and speak to us.
You also need reports that look to the future, which ask
“What will happen in my business”?
These are more difficult to prepare because there is an aspect of crystal ball gazing going on.
3). Budget Report
Having a Budget Report will show you how you expect to make money in the next few months or years, and how much you will have to invest to get that level of income.
4). Cashflow Report
A Cashflow Report in basic terms ‘ follows the money’. Here you can add and monitor what will you spend when, when will you get paid by your customers, what you need to borrow and when will you repay that, etc.
We have helped many businesses understand their numbers and their important metrics. If you would like our help request one of our free coaching sessions here
