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February 13, 2016

Small Business Advice

Your knowledge of finances key to business' health

"I worked in accounting for two and a half years, realized that wasn't what I wanted to do with the rest of my life, and decided I was just going to give comedy a try." ~ Bob Newhart

Jerry Osteryoung | 7/8/2013

After helping so many businesses over the last 20 years, I have come to recognize one absolute truth that must be followed: Every business owner must understand and maintain their financial statements.

Recently, I received a call from an entrepreneur who had been reading my columns for some time. He was having problems in his business and thought that I could mentor him and help get the company on the right path.

I met with him and, as we talked through the trouble he was having, I quickly realized he was buried in an accounting nightmare.

Not only did he have some serious reporting deficits with the various government agencies he dealt with, his accounting data was not even close to accurate. The way he determined whether he was making money was simply to look at his checkbook without any knowledge of what bills were coming due or which ones had gone unpaid. As a result, he had no real idea if he was making profits or taking losses.

His accountant was terrible, and he admitted to me that he had no idea what his financial statements meant.

Before I could step in, he would need someone to address his accounting challenges, so I asked Ken Saxon, a local CPA, to work with him. Ken is my accountant.

Running a small business requires you to understand and ensure the accuracy of your financial statements.

Now, I am not suggesting that all business owners must do their own bookkeeping, but it is critical that the business owner understands what the financial statements are saying and can ensure they are accurate. Taking a course in QuickBooks is a wonderful way to start this process.

You can do this!

Other small business advice columns from Dr. Osteryoung are here. Note: Articles older than 30 days require registration (it's quick and free).

Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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