What a Business Financial Statement Can Tell You About the Health of Your Business

When you run your own small business, it can be difficult to keep an objective distance from what you do.

Bills come in, sales go out, you have your day-to-day goals and you watch the curvy line of profit and loss make its inexorable progress throughout the financial year. You have your big one-year and five-year plans, and it takes a serious upheaval for you to reconsider them.

Even if things take a surprising turn – a rough patch or an unexpected boom period – it is human nature to swallow these changes and rationalize the impossibility of them changing the business plan on which you worked so hard. Maybe you assure yourself that things will work out anyway, or that this is no time to take a risk by deviating from your roadmap.

If you alone are responsible for this business plan and for keeping your company afloat, there might not be anyone else around to challenge your views. This is just one reason why maintaining your company’s financial statement is wise business practice. It also means you have a document ready to present to potential investors or collaborators, and that you’ll only need to give it a tune up when the time comes to approach your bank for a loan to take your business to the next level.

But while it’s always pleasant to look at a sheet of healthy, blossoming figures, even when business is booming the actual process of putting your financial statement together can be intimidating. If you started your company because there was a service you were keen to provide, or an idea for a product you were excited to build and sell, then sitting in front of Excel trying to make the numbers add up probably seems difficult – and definitely not a lot of fun.

When you break the document down into its three component parts, however, it starts to seem more straightforward. And once you’ve created your first one, you’ve done most of the hard work – and all that remains is to update it every quarter, or when you are faced with an investment opportunity.

So what are those three components all about?

The first section is your balance sheet, which gives a birds-eye view of your company’s position. The left hand side of this sheet should show your assets – the cash value of the stock and property owned by the company. This is broken down into ‘current’ assets, meaning those that are likely to be converted to cash within the next twelve months, and ‘non-current’ assets, indicating those you’ll hang on to for longer, such as office furniture or vehicles. The right hand side of the balance sheet is your liabilities – the debts you need to pay. Again these are divided into current liabilities (such as a small loan that you will repay within a year) and non-current ones (your mortgage, for example.)

The balance of this section (your assets minus your liabilities) is represented as the ‘shareholder’s equity’ – what you would be left with if you sold off your assets and settled your debts right now.

The remaining two sections provide different ways to look at the current profitability of your business. Section two, your Income Statement, pits your revenues and gains (including sales, service charges, and any interest you might be earning on your business account) against all expenses and losses (equipment, salaries, rent etc.) for a given period, most commonly the past quarter. This gives an indication of the general health and profitability of your business as it stands.

The final section, your cash-flow statement, is a more specific version of the same thing. Here, your profits and losses should only refer to the cash that’s come in or gone out over the same period. It is a more tangible picture of the current state of your business, not taking into account non-cash elements such as depreciation.

To give you a clearer look of just how it functions, you may be interested to take a look at this handy new visual guide – a kind of dissection of the business financial statement. Get your first statement out of the way, and you’ll find you have a much clearer perspective on the current health of your business – and what you need to do to make the next great leap.

G. John Cole is a digital nomad and freelance writer. Specialising in leadership, digital media and personal growth, his passions include world cinema and biscuits. A native Englishman, he is always on the move, but can most commonly be spotted in Norway, the UK and the Balkans.

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Tips for Landing Your First Job at a Digital Agency

Every year, recruiters get hit with waves of resumes from newly graduated college students looking for internships or starting positions at top firms. In order to make an impact with your potential employer, your resume has to stand out. To help you do this, we made a helpful guide on applying to and landing jobs in digital fields. (This advice is equally relevant for graduates looking for management consulting jobs.) After reading this, you will be able to conduct a successful job search for either an internship or part-time position. So, what are you waiting for? Let’s jump right in. Your job search journey begins with networking!

1. Networking

Landing a job at a digital agency is all about who you know. You have to increase your personal brand to network with industry leaders. One of the easiest ways to do this is to create a LinkedIn profile. Even better, attend conventions pertaining to your industry. There you will be able to meet and connect with new faces who can help advance your career.

2. Use Social Media

Although millennials are familiar with social media platforms, these tools can help you land your dream job. You can use social media tools such as Facebook, Twitter, LinkedIn, and Instagram to help you get to know your employer, as well as the company they represent. You can also use these platforms to promote your professional brand.

3. Do Your Research

A necessary step towards landing your first job is to research the companies and graduate programs that interest you, and any recruiters that can help you land your first role. Be sure to use your social media platforms to their full potential. The more knowledge you have about the company that you’re apply to, the more likely you are to be successful.

4. Create Custom Resumes

Every firm will be different, and have slightly different requirements, that’s why it’s important to alter your resume to fit the job you’re applying for. You should highlight skills and experiences which demonstrate the qualities the company is specifically looking for.

5. Have an Awesome Personal Website

Whether you’re a coder, designer, writer, or aspiring consultant your personal website has to look amazing since it portrays not only who you are, but also the style and quality of work you do. Employers and recruiters will pay attention to every detail. If you leave any stone unturned, it may cost you an interview or a job offer.

6. Follow Directions

When you are applying for jobs, read all of the instructions and follow them carefully. Applications that do not follow the firm’s criteria may not even be looked at.

7. Ask For Advice

Don’t be nervous to talk to the recruiter or company you want to work for. Often they will be happy to provide you with advice on how to apply, and answer any questions you may have about the process or the firm. If you have any contacts who work at the firm, ask them if you can buy them a cup of coffee and ask them a few questions about the organization. Even if the company is not currently hiring, doing something like this can help you make a great first impression, and be in a better position to land your dream job in the future.

8. Be Passionate

If working for a web design agency is what you want, then make sure the firm knows how much you want it. You can stand out from all the other applicants by demonstrating your passion for and commitment to your industry. Having a genuine interest in what you do can make up for a lack of work experience.

9. Don’t Be Afraid To Ask Questions

At the end of the interview, the interviewer will likely ask you if you have any questions. Even if you think you have the answer, ask a question anyway. This shows the interviewer that you are truly interested in the position and the company.

10. Show Your Appreciation

This is one of the best and easiest interview tips to follow. After the interview is over, send a thank you email to everyone you met. This will not only exhibit your appreciation but also your interest in working with the company.

Finding your first real job may seem like an anxiety-inducing task, but with a little preparation, it can be done. All you need is a little dedication, effort, and patience and in no time at all, you will have a foot in the door.

With these ten tips in mind, your job search will be much easier and less stressful to complete.

Do you have any advice for first-time job seekers? Please share your thoughts in the forum!

Wassana Lampech is a medical technology graduate and a freelance writer. She has been writing since her college days, and has been a freelance writer for the past 4 years. You can follow her on Twitter here.

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