Even though we’re accountants, we get that financial reports aren’t at the top of every small business owner’s to do list. Most small businesses run on slim budgets and personnel staff of one or just a few. But whether you keep your own books or employ the services of a bookkeeper or accountant, understanding the numbers can help your small business just as much as it could help a large corporation. So lets cover some basics so that you’re ready to make sense of it all and succeed with your business.
Know the Key Terminology
It goes without saying that understanding the terminology will help a ton in understanding your financial reports. We cover quite a bit of it here on the blog but you can also easily find it just by searching the term on the internet. Our best advice, read through this post and the one we link to down below. Search definitions for any words you don’t know, and jot down definitions in a notebook or sticky and put it with your financial paperwork. If you’ve got a bookkeeper or an accountant on hand – ask them. You’re more than likely paying for their services, so schedule a time that you can pick their brain, or ask for an entry-level crash course to the financial reports that they’re creating for you. No matter how you go about it, you can always come back here and look for those key accounting terms explained – we have a word of the week posted here on the site and you can learn about the first one, income statement, right here.
Be Consistent in Reviewing Your Financials
There is absolutely no reason to make sense of your financial reports if you’re not going to read them – on a regular basis. So right now, before you even dive into your first report, pull out your phone or your work calendar and set a monthly meeting for you and your books. Consistently reviewing the financial reports will help you create long term strategies to grow your business or expand your product line or services. We promise the time you commit to reviewing your financial reports monthly will be well worth it.
Looking to learn more about what your financial reports really tell you? You can read all about it here.
FAQs about Small Business Financial Reports
Why are financial reports important for small businesses?
Financial reports provide insights into the financial health and performance of your business, guiding strategic decision-making and growth.
How can I understand the key terminology used in financial reports?
Search online resources for definitions, ask your bookkeeper or accountant for guidance, and explore educational posts and resources provided by accounting professionals.
Why is consistency crucial when reviewing financial reports?
Consistent review of financial reports enables you to track progress, identify trends, and make informed decisions to drive business growth and expansion effectively.
What benefits can regular review of financial reports offer to small businesses?
Regular review helps in identifying areas for improvement, adjusting strategies, and setting long-term goals to enhance business performance and profitability.
Where can I learn more about interpreting financial reports for my small business?
Explore comprehensive resources and educational materials provided by accounting professionals to gain a deeper understanding of financial reports and their implications.
