The Best Use of Your Financial Statements – A Basis for Decision-Making
Whether your company is struggling to get by or ready to expand, you’ll need to make some decisions about what to do next. The best place to gather what you need to inform your decisions is your financial statements.
As you analyze your financial statements, the best ways to keep your company going and growing become apparent.
Some of the biggest decisions new business and small-business owners face are:
- When to put more of their own money into the company
- If and when to take on additional debt
- Whether new debt should be long- or short-term
- How and when to expand
- Whether it pays to keep the company going
These choices are hard to make, especially the one about deciding if it’s time to let the company go and try something else. A lot of new business and small-business owners avoid these decisions, letting events just unfold until decisions are made for them. Planning ahead and making careful, informed decisions helps you preserve more of your capital.
Most of all, though, a complete analysis of your financial statements will help you manage your business more efficiently every day. Those daily, seemingly small decisions can have as much impact on your company as the major ones. Take direction from your analysis; if numbers fall below your plans and expectations, take steps now to correct the problem and keep your company from failing. When the numbers are as good or better than expected, you can start thinking about expansion. Growing your business in small, manageable chunks will serve you better than will an overnight expansion.