“Knowing how to read your financial dashboard is the key to survival. In my experience, 90 percent of people who start a small business have no clue how to read financials. That’s why most don’t survive. Most small business owners think it’s complicated, so they’re afraid of it. It’s really easy to teach people how to monitor what drives their business success.” Accounting for the Numberphobic – A Survival Guide for Small Business Owners. Dawn Fotopulos, Amacom, 2015.
Small businesses, mostly fail because of mismanagement, not because they have a terrible idea or the founders don’t work hard enough. Often, it is because owners fail to recognize one of the most critical required skills — the ability to understand their finances. I don’t blame them. They hear words like gross margin ratios, cash flow forecasting, and GAAP — and they cringe. You need to assemble the right experts to help you, but it’s equally important to know what your financial numbers mean.
Although I’ve been an entrepreneur for over three decades, this is the first time I can say, “I got it!” I recognized a balance sheet differs from a profit-and-loss statement, but I didn’t understand how to construct simple benchmarks so I had an easy-to-read picture of my business.
Don’t Risk The Financial Health of Your Business
A fast-growing company asked me to help them understand their financial documents. They knew better than to watch increasing sales figures without knowing how much of the income is profit. Although that’s true, I was having trouble explaining it.
As I looked around for help, I landed on Accounting for the Numberphobic – A Survival Guide for Small Business Owners by Dawn Fotopulos. This book catapulted into my number one book recommendation spot for all small business owners.
Fotopulos puts these problematic concepts into terms and illustrations everyone can and must understand. Even if you comfortable with numbers or you rely on a proficient accountant, I urge you to read this book.
Benefit From Common-Sense Financial Advice
Most of us rely on instinct, our bank balance, or our gross sales figures to tell us how we’re doing. Although these figures are essential, knowing how much profit is going in our pocket and whether there will be money in the bank at the end of the month, are also important. She will teach you to use two powerful tools to gauge the financial health of your business; gross profit percentage and net profit percentage.
Accounting for the Numberphobic uses plenty of real-world examples and questions at the end of the chapter to help you comprehend tricky principles. This is a book you should devour and keep handy on your business bookshelf to return to again and again.