Avoid Surprises - Understand Your Profit and Loss Statements
How is your bookkeeping process going for you? Do you generate profit and loss statements? Do you understand them? Do you simply pay the bills as they come in and hope there is enough left in your business account to continue operating or do you have a system in place that will help you forecast your financial future? By now you are either rolling your eyes or sinking into your seat. If it's the latter, you may be thinking, ‘Who has time for numbers'?
Many solo and small business owners are so busy working in their business that they're happy to simply make ends meet. 'Someday' they will take a crash course in QuickBooks and figure out what there P&L's are saying, but right now its sink or swim. Sound familiar?
Derigo, LLC can help!
The bad news is that you will sink farther than you can swim if you don't run your business by the numbers. Here are some real life examples:
Joan was thrilled to report to her coaching session with news of a 12% increase in sales year-to-date. Fantastic! But the thrill didn't last long when we walked through her reports only to discover that she was down in profits by 4%. How could that be? Being a busy solo entrepreneur who is working IN the business, Joan didn't realize that the spreadsheet she uses for her bidding process had an error in it. As a result, she was underbidding business for the past 4 months. Ouch! Her cost of goods and outsourced labor ate away at her reduced profit at a steady pace. This was a deadly mistake that could have been avoided with weekly visits to her Profit and Loss statements.
Bob was great at pulling his numbers every week, but not so good at studying them. An entire quarter went by before he realized that his shipping costs had escalated in staggering amounts and were seriously eating into his profits. The good news is that Bob assigned the task of researching other shipping options to his very capable intern and together they implemented a procedure that brought costs under control. The bad news is that Bob lost a lot of money in this year's first quarter that could have gone into his pocket.
Derigo, LLC can help!
There are many reasons that business owners neglect their numbers. Here are some of the ones we hear:
If this information strikes a chord, please learn about this important aspect of your business. Here are some things you can do to learn how and to have the support that you need:
- I don't understand them so why bother?
- Things seem to be going just fine. As long as I'm making money what difference does it make?
- I don't have the time; I'll get to it someday.
- I'm afraid of what they will tell me. What if I find out that my business is a failure?
- I can't afford a bookkeeper.
- It's just me; I'm a solo entrepreneur, why do I have to keep track of the numbers?
- I just don't know where to begin.
Whatever path you choose (and there are many options) make this a critical goal and you may be rewarded with stronger profits.
- Hire a coach
- Go to your accountant
- Visit your local S.C.O.R.E. office
- Find a mentor or fellow business owner to help
- Hire a part time bookkeeper
Where can I get some help? Contact Derigo, LLC.
Understanding your financial statements is critical to your business success. Derigo, LLC has staff available to help you so that it is no so overwhelming.
We are here to help. Call or email us now. We can be reached at (916) 626-0827 or via email at firstname.lastname@example.org.