What did you accomplish in 2019? This has been a year of growth for SBS Accounting & Advisors, from expanding our practice and offering advisory services, to retooling our website and focus on marketing. As we prepare for 2020, one last message I’d like to leave you with has more to do with prosperity than it has to do with the future: financial fluency.
What does it mean to be financially fluent? I’ve spent part of this year going through an immersive training to better understand business dynamics, and one of the primary focuses is on being able to understand what numbers mean and how they affect growth.
One mistake business owners make, without probably realizing it, is that they take their numbers for granted. They believe what they want to believe; in other words, if someone in their company is telling them they’ve got cash in the bank, they believe they are solvent and ready to buy a 72-inch high-def TV for their lobby.
Throughout this year – and even beginning with my first blog of 2019 – I’ve advised that your numbers are more than just black ink on paper or a screen, and while numbers can be sliced and diced any number of ways, being financially fluent means really understanding what your numbers mean, and how they could positively or negatively affect your company’s future.
If you finish 2019 with no other knowledge of financial fluency, I’d like you to remember these three goals and the tool you already have to understand the outcome:
- Goal #1: To sell your goods and services for more than it costs us to provide them: Review your income statement.
- Goal #2: To maintain a healthy cash flow to keep the company running: Review your cash statement.
- Goal #3: To get a return on investment: Review your balance sheet.
Said another way, your income statement shows Revenue – Expenses = Profit:
- Revenue: How much money you bring in.
- Expenses: How much money you spend.
- Profit: How much money you have left over.
And, your balance sheet shows Assets – Liabilities = Equity:
- Assets: The value of what you have.
- Liabilities: The amount you owe.
- Equity: The remaining value left over.
I realize there’s a lot of math involved in coming up with your numbers – and I also know you want to focus on your business instead of the numbers. If you’ve kept up with our blog in 2019 and prior years, you know by now that the SBS Team is not only excellent in interpreting your numbers; we’re experts in advising you on making a profit.
It’s kind of like the garage mechanic who fixes cars. He’s great at diagnosing a problem having to do with your gears or engine, but wouldn’t be able to look at, and understand, his numbers without guidance. We’re great at looking at the numbers and teaching you how to be financially fluent, but would never attempt to change our own oil.
We want you to rely on SBS to help you become financially fluent, so contact us any time for a quick conversation, or even an in-depth session with you and your staff. Our greatest joy is knowing we’ve helped our clients succeed!
As 2019 draws to a close, I want to leave you with an inspirational message of faith and kindness:
“The fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, self-control. Against such things there is no law.” — Galatians 5:22-23
Let’s all try to be more kind to each other in 2020, celebrating our Lord, family and life.