In this third in the series on building value, we will spend some time with the balance sheet and the income statement. Most shop owners we meet are a pretty savvy group, having endured tremendous obstacles along the road. Many, however, are not clear as to how to read financial statements.
Most owners have a bookkeeper to keep track of the cash, receivables, payables and the payroll.
Maybe he has a controller who is concerned about profits, cost control, and banking relationships. His outside accountant gives him tax advice and prepares the tax return and financial statements. But it is the owner's responsibility to know what the statements mean. Unfortunately, more often than not, that is not the case. In this article we will point out some of the things your statements are trying to tell you.