Pinoy Business Coach

Why learn to read them? They have a knack to be boring since they deal with numbers.  The fact is most of the Entrepreneurs and Micro Business people I have encountered do not know how to make even the simplest of these statements.

 If blood is to the body then Cash is to a business. Financial Statements give a broad picture of how healthy or how sick a business really is.  Without doing these statements, the business person may be hind-sighted in looking at the state of his business.

There are at least 3 Statements that need to be monitored regularly: Income Statement, Cash flow Statement & a Balance Sheet.  You cannot do 1 without the other.  These statements will help you determine your Net Worth also and will enable to Manage your Cash Position.

Managing your Cash Position is an entirely different skill that an Entrepreneur needs to develop.  Knowing how to anticipate cash needs, knowing where to get sources of Cash and knowing how to manage excess cash is an entirely different set of skills and  I think these set of skills is perhaps a very invaluable skill that the Entrepreneur needs to develop.  This takes a lot of emotional maturity since in the Philippines, capital for SMEs is ridiculously hard to find.  This will take a lot of imagination, creativity on the part of the business person.

Financial Statements become useful tools in Managing Cash Positions and in making financial decisions as to expansion, diversification or in formulating an exit strategy.  Proper recording can be a challenge but can be done through the use of a mere Microsoft Office Excel file.  It need not be really technical Accounting Software, knowing and mastering the basics will do.

Take time to review how to formulate these statements and richer possibilities will be opened to your mind!