Money is the lifeblood of a business.
It’s like electricity. When there is good cash flow things get done because bills and salaries are paid. It’s important to carefully watch the income and expense sides of the business. The processes I outline below are just a few of the important things that a business should understand. Spend time thinking about each of these categories when writing a business plan, or planning for growth in the future.
1. Budgeting – Knowing How to spend money.
2. Forecast – Knowing how to anticipate costs with growth.
3. Reporting – Creating the Balance Sheets , Income Statement, and Cash flow Statements
1. Accounts Payable – Paying the Bills
2. Accounts Receivable – Getting Paid
3. Categorizing Expenses – Knowing where the money is going.
4. Categorizing Income – Know where the money is coming from.
Individuals need to manage their finances. Organizations need to manage their accounts. If you can’t budget, you can’t hire. If you can’t hire, you can’t grow. If you can’t grow, you will die. If you can’t forecast, or report, you run into the same problems: you can’t hire, or grow, so you die. If you don’t ensure that your employees are paid on time, you might not have employees for very long. If you don’t ensure that you are paid on time, you might not have a company for very long!
Some of the books that we recommend to our employees for learning about finance, business finance and personal finance include:
- I Will Teach You To Be Rich, by Ramit Sethi
- Too Big to Fail, by Andrew Sorkin
- Your Money, The Missing Manual, by JD Roth