What is it really like to own a business? Knowing your numbers…

The financial component of owning a business is probably the weakest area seen in small business startup and ownership today. Many are just not ‘numbers’ oriented. They’d sooner have a root canal then look at a financial statement! So what can you do if you’re one of these people?

Let’s start with knowledge. I feel the best business owners are generalists. They know a little bit about every aspect of business. So the finances certainly should be one of those areas. If you were a business major in college, you probably have at least the basics already for running a business. Doesn’t mean you should stop there, but you at least have a foundation to build on. If you weren’t a business major, say you’re a builder or engineer or architect starting your own firm, you need to get up to speed. Knowledge will give you a greater comfort level with the numbers. So take an accounting class. Go to business workshops. Sit down a few times a year with your accountant, get him to explain the dynamics going on with a P & L statement and a balance sheet.

What if you are the business major? Seek a higher level of knowledge. Go to workshops that are several days in length, where they go into the deeper aspects of understanding and running a business. Maybe it’s a wealth building workshop where they teach some investing (be sure they consider your business an asset! (Some financial planners for example, don’t…)

Lastly be sure to have a good software system deployed to track and report the numbers in your business. Know your numbers! QuickBooks is probably the most popular small business software out there. But there are others. It does have some drawbacks so see what works for you. Take a class or at least do the tutorials. Understand how to do the books yourself even if you aren’t doing them. But I encourage you to employ or outsource this to a bookkeeping company. You want things set up properly, accuracy in reporting, and ongoing operation of your business for things like check writing.

Again, being a business owner you must know your numbers!