Isn't My Business Too Small To Worry About Financial Statements?

A common theme from some of the reading and training that I have done over the past few years is that if you think small in your business and life too for that matter, then that will become your reality.

Those thought patterns of "smallness" will be a self-fulfilling prophecy, and you and your business will always remain small.

If on the other hand, you are able to step outside of your comfort zone and grow to become bigger than you are, you will grow into those bigger shoes.

Money and finances are the largest aspect in your life and your business where that view manifests itself.

I know that financial statements can be confusing and the accountants that typically create them like to use words like debits and credits that are confusing to us laymen. I want to dispel that myth. Financial Statements are for everyone who is in business, and you need to be paying attention to them.

When I say financial statements, what I am talking about are the Big 3. They all have multiple names, probably so that the accountants can try to keep us laymen in the dark, but their most common names are the Balance Sheet, Income Statement and Statement of Cashflows.

I want to dispel the myth that you can't learn about financial statements, and in fact I want to argue that they are critical to your success no matter what size your business is today. They are just as critical, if not more so for the small business owner as they are for the big companies.

For years I was of the same mindset that financial statements were only for the big guys, and that though was reinforced by my CPA at the time that refused to create them for me.

I was submitting a bid for a government contract and one of the required elements of the proposal was 2 years worth of financial statements. I pulled something together to add to the proposal, but maintained the thought that if my CPA wouldn't even create them for me, how important could they be.

Over time I came to the conclusion that I needed a new CPA, but I'll leave that story for another post.

When I found a mentor that explained financial statements in terms I understood, and demonstrated to me their importance even to a small business like mine, that was a real eye opener (and the final straw for the old CPA).

I now produce and review financial statements for my Independent Contracting business every month, then roll those up to a quarter and year. That change in mindset has made a significant impact on the success of my business.

When I review those statements it gives me valuable information for how my business is doing over the short term, but more importantly I can see longer term trends and even use those financial statements to forecast the future. I can do "what if" projections to see how increasing revenue or decreasing expenses or other changes will impact the future.

If this topic caught your interest, I have more details in my special report that you can download for free just for entering your e-mail address.

Do you produce financial statements for your Independent Contracting business? Does your CPA/Bookkeeper do it for you? Do you review them regularly?