Is it important for small business owners to understand their financial statement ?
This is definitely something a small business owner must understand, it is up to the business owner whether or not they seek financial advice from a professional accountant.
Knowing how to interpret these statements are crucial for successful business planning, as you are able to keep a keen eye on your operations and cashflow.
Having expertise, experience, professionalism and competent people on your team is a valuable and worthwhile investment in yourself and your company for sustainability and future growth. Having the correct financial procedures and cash flow management systems in place based on analytic reports and regular business health checks (all formatted in easy to understand terms) is just part of having a proven book keeping system .
Keeping the books or recording business transactions, payroll procedure etc is not fun or exciting but is absolutely essential. Bookkeeping is something no company should ignore. As a matter of fact, it's an area that can't be ignored for too long without major financial repercussions.
Having someone who actually knows what they are doing with the experience the knowledge and passion is a major key factor when investing in any successful and proven system.
If the small business owner doesn't understand their financial statements I cannot see how they can succeed. Its a worse situation than the driver who gets into the car and sets off for Paris without a map as the driver at least knows where they are headed.
For most SME's the accounting or financial management side of their business is a chore and one they would rather put off but its no more of a chore than keeping ones house clean and we all know what happens when we put that off.
If too busy get a bookkeeper or a house cleaner but get it done.
With the excellent accounting packages available so inexpensively and online help available 24/7 there is no need or excuse for sloppy book keeping.
Short answer - YES, YES, & YES!!! Can't agree more with all the responses.