Financial Statement Basics For Small Business Owners

 

Every business owner needs to know the basics of financial statements. Know this information if you are completing them yourself or if you are outsourcing to a bookkeeper

 

Statements are difficult to analyze but are critical to the health of your business. Keep reading for the basics of what financial statements are and a breakdown of the main statements.

 

What are Financial Statements?

The purpose of financial statements is to understand how much money the business owes, how much is being made, and the difference between what is outgoing and incoming each month. 

 

Compile an annual report with information from financial statements. Explain the year’s business numbers with employees, regulators, shareholders, stakeholders, unions, and vendors. These reports help you meet and plan yearly goals

 

financial statements

What are the Four Basic Financial Statements?

There are four main statements that every business owner should know. This includes balance sheets, income statements, cash flow statements, and equity statements.

 

Balance Sheet

A balance sheet breaks down your assets, liabilities, and equity. It will show depreciation for specific items from the date the item is obtained to the present day. The basis of this statement is from the accounting equation: Shareholders’ Equity = Assets – Liabilities

 

Income Statement

You may also hear the term “profit-and-loss statement.” You need your sales revenue and a list of your expenses during a specific period to prepare an income statement. This statement shows your business expenses and any depreciation over the specific period.

 

Cash Flow Statement

The cash flow statement is for both physical and virtual money transferred in and out of your business. It is a combination of information from your income statement and balance sheet. Compare cash from operating activities to your business’s net income to determine the quality of your earnings.

 

Equity Statement

An equity statement is also referred to as a statement of owner’s equity. This statement reports the changes in company equity. Earned profits, dividends, an inflow of equity, withdrawal of equity, and net loss are shown on this statement. 

 

Financial Statement Tip

When investing or purchasing from a company, read their financial statement. While doing so, beware of false numbers! These companies can use specific numbers and omissions within their statements to make them appear more profitable than they are. While this is not the norm, it is important to note that it is a possibility. 

 

Outsource Your Financial Statements

An important part of owning a business is understanding financial statements. Make your life easier by outsourcing your financial statements. Hire a bookkeeper that you trust. 

 

PL Consulting is your go-to resource for bookkeeping and accounting services. We serve the Baltimore, Maryland area and beyond. Our bookkeeping and accounting services are customized to each client. Your ideas are unique to your business, and we understand that. We help you maintain good records and financial statements.

 

Questions? Call us at 410.764.3731 or contact us on our website to schedule an appointment with one of our professional bookkeepers.

 

4 Tips for a Profitable Startup

 

Do you have a business idea that you want to make happen? Remember that a business comes with many working parts. After coming up with your initial idea, find a mentor, conduct research, raise funds, and create a plan of action. Follow these tips when creating your startup company.

 

startup

 

Find a Mentor

Starting your own company is not something that is accomplished alone. If you want to succeed, then you will need to enlist the help of others. This could be a business owner who has created their own startup company, an industry professional, or a consultant.

 

Build a relationship with this person. A mentor is important because the internet does not always have all the answers to your questions. Mentors have experiences in their life that they can share with you to help you prosper. 

 

Conduct Research

One of the most important elements of starting your own company is researching your target market. This ensures that people will want to buy your product or service. Gather information from prospective customers, specifically those that are not your friends or family. You will gain insight into how to market your business and attract new customers.

 

If you are creating a survey, be sure to test it out before sending it to a large group of people. The last thing that you would want is to have an invalid survey because you did not ask the right questions. Include multiple-choice questions and extended response questions where people can give more details. 

 

Set Up a Business Plan

You need to know how your business will run and how it will achieve a profit. Business plans help secure loans and funding. A business plan is extremely detailed. They include an overall idea of your business, where it is located, hours of operation, and how it will generate profit.  

 

The most important element of a business plan is the executive summary. It is a summary of the entire business plan and details how you will stand out from your competitors. This is written last, even though it is the first part of your business plan. 

 

Raise Funds

You might need to take out a loan for a building renovation, new product, or marketing expense. Budgets and business plans are key to raising funds for your startup company. Investors and banks want to see that you are organized and make payments on time. 

 

Questions About Your Startup Company?

Starting your own company takes a lot of knowledge and effort. We encourage you to take note of these business tips to grow your company from the ground up.  

 

PL Consulting has served the Baltimore, Maryland area for many years. We customize our services to each client and their business plans. Your ideas are unique to your business, and we understand that. 

 

Do you want to learn more about budgeting or raising funds? We are here to answer all the financial questions you have for your startup company. If you would like to set up an appointment with us, call 410-764-3731.

 

Big Mistakes That Have Cost Small Businesses Money

 

Business owners learn throughout the years from failures and experiences. Here are 5 mistakes that many small business owners make. Avoid these mistakes so you can grow your business successfully. 

 

Not Having a Business Plan in Place

A business plan sets the parameters for everything related to your business. It gives you structure and premises for how you should run your business operations. It also helps you assess and measure progress. 

 

A common misconception about business plans is that they are only used to persuade investors to help finance your business. However, they help with marketing and business milestones. A business plan helps with past, present, and future storytelling.

 

Not Utilizing a Financial Accountant

You want to have a clear view of finances as they relate to your business, so separate your business account from your personal one. A professional accountant keeps track of your business finances. When hiring a professional accountant for your business, consider these 5 things. 

 

  • Desired services
  • Reviews
  • References
  • Pricing
  • Involvement.

 

Setting Goals Too High

Goals are how your business measures success. Set daily, weekly, monthly, or yearly goals. If you own a startup company, do some research on numbers you want to reach. Avoid being overly optimistic, even though you may be eager to grow your business.

 

Check if you met your goals, and use that as a benchmark for the next goal that you set. If your goals were not met, determine what went wrong. Was it an external factor that your business could not control? Did you or your employees not put in enough effort? If your goals were exceeded, find out what worked well. Are you selling a popular new product? Do you have a lot of engagement on your social media? 

 

Not Maintaining a Budget

A budget maps out each of your business costs. From there, your business can set reasonable prices for products and services to make a profit. The budget prevents you from overspending. If you need loan assistance, your budget shows lenders that you make payments on time and have valuable assets. 

 

Your budget also helps you analyze all the risks that your business has. It is difficult to budget for things that have not happened yet, but putting extra money aside can save your business in an emergency. 

 

mistakes

Having an Unorganized Work Environment

Set yourself up for success by organizing your paperwork and online files. If you feel you have too much going on and are missing deadlines, delegate tasks to someone else. This reduces the amount of clutter in your work environment. Streamline your processes so that you and your employees can easily access files and understand what needs to be done. 

 

Avoid These Common Mistakes in Your Small Business

Do you want to learn more about budgeting, financial accounting, or goal setting? We are here for questions you have as a small business owner. If you would like to set up an appointment, call us at 410-764-3731.

 

Get Your Small Business Ready For the Holidays

 

Fall and winter holidays are quickly approaching us. Although this year may look different, people are still looking forward to spending time with their families (safely, of course.) 

 

Get ready for holiday promotions, high traffic in-store and online, and increased profits. Is your small business ready for the holidays?

 

holidays

Plan Ahead of Time

 

The holidays are hectic and stressful. Stay level-headed by planning as much as you can ahead of time. Determine what promotions you are having each week. Make your advertisements. Estimate your expenses. Planning ahead helps manage your finances

 

Set Sales Goals

 

Many small businesses have their busy season around the holidays and Small Business Saturday. Set goals based on last year’s sales. These goals help you measure success

 

In the long run, your sales goals will make a major difference in your business. These goals can gradually increase as you accomplish them.

 

Follow Up and Get Reviews

 

What makes your business stand out? With so many options for consumers to purchase from, it may be hard to choose. When your business has positive feedback on social media and your website, people are more likely to purchase from it.

 

Encourage your customers to give their input on your products, services, and promotions so you can make changes for next year. Maybe something that you did went better than expected, and it is important to know that so you can leverage it. 

 

Support Your Community

 

During the season of giving, provide a helping hand to your local community. Donate to charities as an act of kindness. Donations include money, food, clothing, and services. 

 

Get your customers involved by setting up a canned food drive inside your business. Put up a “giving tree” where customers choose a person in need and purchase gifts for them. Match every dollar that customers put into your donation jar for an important cause.

 

Show Employees Your Appreciation

 

Your employees work hard all year, and even more so during the holidays. Express how much they mean to you. Do this verbally, in a written card, or with gifts. Each one of your employees is unique, so personalize their gifts. 

 

Some employees may want a bonus or a monetary gift. Others love getting clothing items or bottles of wine. You can even throw a holiday party at a local restaurant.

 

Give your employees time off on major holidays if you can. This acknowledges that their time is valuable. They have the chance to spend the day with their family instead of working. 

 

Happy Holidays!

 

PL Consulting hopes that this holiday season runs smoothly for your business. Get your business ready!

 

We customize our services to each client and their business plans. Your ideas are unique to your business, and we understand that. 

 

Have questions about financing, bookkeeping, or increasing profits? We are here for all of your questions as a small business owner. If you would like to set up an appointment, call us at 410-764-3731.

 

6 Productivity Tips for Small Business Owners

 

Small businesses continuously figure out ways to expand their reach and compete with large corporations. Among their many talents, small business owners come up with creative ways to succeed with their productivity.

 

small business owners

Prioritize Tasks

 

Write or type out a list of your tasks. This list determines what should be focused on right away. You will know what does not need as much attention at the moment. Your running task list should have due dates, so you never miss a deadline. Continue to update this list as you gain or complete your tasks.

 

Once you decide the order of tasks that you need to work on, delegate tasks to one of your employees or an outside contractor. If you are new to this, check out our guide about when you should start delegating tasks as a small business owner

 

Set Up an FAQ on Your Website

 

An FAQ page shows customers important information about your business. Answer simple and common questions that many of your customers have. This page minimizes the number of phone calls, messages, and emails your business gets daily because customers will have more clarity.

 

Automate Everything You Can

 

Do what you love as a business owner. Again, the less time that is taken answering repeat questions, the more time you have to work on new products and scale your business. 

 

On your business’s Facebook page, people have the option to send instant messages. Set up recurring questions that your customers typically have so it is easier for them. Turn your automatic response on for those common questions and answer them thoroughly.

 

Websites have a similar option with instant messenger chatbots. These pop up on websites and answer almost any question that a customer has. If the person’s question is not answered with the automated responses, they either have the option to call or message an employee.

 

When customers call your business, have an automated response giving them information about store hours, location, and other frequently asked questions. This frees up time spent on the phone with customers, giving you more time for productivity.

 

Streamline Your Processes

 

Refining each one of your business’s processes leaves less confusion and sets clear expectations for your customers and employees. Streamline your management style as a small business owner so you have more time to focus on creativity and strategy. 

 

Have Great Communication

 

Arrange daily or weekly meetings with your staff so that everyone is on the same page. Make these meetings short and focused so that everyone can get back to working on their task list.

 

Communicate with your employees about what the strategies and policies are in your business. By relaying these vital details, you are setting employees up for success.

 

Outsource Your Bookkeeping

 

Outsource your business’s bookkeeping to a firm that specializes in it instead of doing it yourself. PL Consulting customizes services to each client and their business plans. Your ideas are unique to your business, and we understand that. 

 

Small business owners, we are here to answer questions you have about keeping your small business productive. If you would like to set up an appointment, call us at 410-764-3731.

 

The Best Podcasts For Small Business Owners

 

Podcasts are great to listen to while getting work done, driving in the car, or as background noise. With so many options of what to listen to, we broke down the following podcasts by categories that are helpful to small business owners. 

 

podcasts

Marketing

This aspect of your small business includes social media, online marketing, traditional marketing, and even blogging. These three podcasts will keep you up-to-date with the newest trends.

 

Online Marketing Made Easy with Amy Porterfield 

Wondering how to start your business online? This podcast features mini marketing masterclasses and step-by-step guides.

 

Social Pros

Get insights from social media strategists including current trends and ideas. 

 

Pro Blogger 

The goal of Pro Blogger is to help business owners develop effective blog writing habits. 

 

Finance and Investing

Your small business needs financing and investing to grow. Listen to these podcasts for money making tips and tricks.

 

Masters in Business

If you are looking for people that speak about the market, financing, and investing, this is the podcast for you. 

 

Smart Passive Income

Pat Flynn dives into techniques for increasing profits and growing your business. 

 

So Money 

The host of So Money, Farnoosh Torabi, brings on guests to talk about their personal stories around money. This helps listeners learn lessons others have already learned the hard way.

 

Technology and Software

If your small business is into using the latest technology and software, listen to these podcasts.

 

Shopify Masters 

Successful entrepreneurs are invited to this show to talk about their experience and advice for growing businesses with Shopify. 

 

Startups For the Rest of Us

This podcast is helpful for both startups and businesses with years of experience. The host Rob Walling shares his experiences and mistakes for business owners, designers, and developers to avoid. 

 

This Week in Tech

TWiT focuses on tech news and reviews, consumer electronics, and the internet. The panelists vary from week to week. 

 

Inspirational

Lacking motivation or ideas? These inspirational podcasts will give you the push that you need.

 

Goal Digger 

Tune in to learn how to work hard and tackle your biggest goals along the way.

 

The Tim Ferriss Show 

Ferriss speaks to high achievers in business, investing, music, science, and sports about how to do things better in their industry.

 

The GaryVee Audio Experience 

GaryVee has a motivational tone that makes his podcast inspiring for startup businesses. 

 

Questions About Your Small Business?

If you have questions outside of what these podcasts offer you, we are here to help. PL Consulting has resources for bookkeeping, taxes and accounting, budgeting, and so much more. Our one-on-one interactions are valuable for both your team and ours. 

 

We customize our services to each of our clients and their business plans. Your ideas are unique to your business, and we understand that. 

 

We are here to answer questions you have about running your small business. If you would like to set up an appointment, call us at 410-764-3731.

 

Why Your Small Business Should Support Fair Trade Certified Products

 

October is Fair Trade Month. It is about supporting businesses that are Fair Trade Certified. These businesses create equality in the international trade system through respect and transparency. Americans are encouraged to shop Fair Trade businesses this month in their communities. 

 

Last year, Fair Trade USA impacted over 975,000 farmers and workers in 45 countries across Africa, Asia, Oceania, Latin America, and the Caribbean. Fair Trade USA stated that “the fair trade market is growing because of businesses’ dedication to Fair Trade USA standards. As a result, consumer awareness of the Fair Trade Certified seal is at 63%—nearly double what it was in 2008.”

 

pl consulting fair trade

Fair Trade product categories include:

  • Bananas
  • Avocados
  • Coffee
  • Chocolate
  • Textiles
  • Clothing

 

Here are the benefits of why your business should support Fair Trade Certified products.

 

Help End Poor Working Conditions

Certifications prevent poverty due to businesses paying low wages. It also focuses on ending sweatshop labor conditions. This assists producers in developing countries to achieve fair trade relationships.

 

Back Your Mission

If your small business sells or uses Fair Trade Certified products, it supports your business’s philanthropy of promoting the welfare of others. It motivates your community to support this movement. Your business will have a meaningful impact on equality and do something good for the world.

 

Focus on Sustainability

Environmental degradation is another focal point of Fair Trade Certified products. This includes the depletion of air, water, and soil resources; the destruction of ecosystems; habitat destruction; the extinction of wildlife; and pollution. Your business would support environmentally friendly business practices to reduce the amount of degradation. 

 

Keeping up with consumer trends is important for small businesses, and this is a topic that many people care about. This will attract more customers to your business if you support the causes they believe in.

 

Find Fair Trade Certified Products

When a customer spots the green and blue Fairtrade Mark, they can shop with confidence and know that your business is making a positive impact on the world. Both the business and consumer are using their purchasing power to support farmers and workers who deserve to enjoy sustainable livelihoods and equality. Not sure where to start? Check out these Fair Trade Certified products

 

We encourage your business to support Fair Trade Certified products. Sell certified food items at your stores like avocados and bananas. Make employee uniforms from Fair Trade clothing. If you sell coffee or offer it for free to customers/employees, find a Fair Trade option. Supporting these products stimulates business growth and opportunity. 

 

PL Consulting is here as your business’s go-to resource when you have questions. Not sure how Fair Trade products fit into your business plan? Call us at 410.764.3731. We customize our services to each of our clients and their business plans. 

 

Why is Customer Feedback So Important to Your Small Business?

Small businesses should focus heavily on customer feedback. Small businesses do not have as much brand awareness compared to large corporations and chains. Customer feedback brings new customers to your business. Customers are the most valuable source of information when planning customer experience, products, and services. 

 

Customer Feedback

 

Helps Customers Find You

Potential customers are constantly researching before making a purchase. Customer feedback is a huge part of their research. For example, when looking for a new restaurant, people check out Yelp and Google reviews. E-commerce websites should have an option to leave feedback about purchased products so that new customers have something to help make their decision. 

 

A person is more apt to buy from a business with many reviews over somewhere that barely has any. People typically search through reviews and determine which ones are the most useful. Never delete bad reviews or leave fake reviews. It is easy to spot if your business has done that and the person will be less likely to purchase from your small business. 

 

Aids in Product and Service Changes

Customer feedback is a sizable factor in changing how your business runs. Sometimes a new idea does not work out as planned, and the only way to know this is through feedback. If your construction business gets customer feedback about the quality of work, you can make changes or level up what you are already doing. 

 

How to Get Customer Feedback

High-quality feedback is not always easy to collect. Emails are a great way to follow up with customers. You can send an e-mail shortly after they purchased to see how satisfied they were with the purchasing process and their initial thoughts. Send another follow-up e-mail as more time passes asking if they still enjoy their purchase.

 

Social media is an inexpensive way to gather customer feedback. First, build a following that trusts your small business enough to interact with its account. Then ask questions or post surveys that your audience would like to respond to. If customers comment on posts or leave a review saying that they had an issue with your business, message them or encourage them to call you so you can fix it. 

 

Give customers an incentive to respond to surveys. This could be a percentage off or the opportunity to enter into a drawing. Sometimes these surveys take too long, so encourage the customers with something valuable to them. Send the survey links through e-mail or print them on receipts.

 

PL Consulting is Here for Your Small Business

PL Consulting offers a diverse range of bookkeeping and budgeting services. We are here as your business’s go-to resource when you have questions. Our services are customized to each of our clients and their business plans. 

 

If you have questions about receiving customer feedback, call us at 410.764.3731 or book an appointment through https://calendly.com/michaelplc.

 

 

4 Ways to Promote Accessibility in Your Small Business

 

The Americans with Disabilities Act (ADA) was signed into law 30 years ago. It protects anyone with a physical or mental impairment. This includes more than just people that are deaf, blind, and in a wheelchair. Physical conditions like diabetes and mental conditions like bipolar disorder are also covered by the ADA. 

4 Ways to Promote Accessibility in Your Small Business

There have been huge steps towards change in accessibility and inclusivity in businesses, but there is still more work to be done. Your business must be ADA compliant if it has 15 or more employees. If your business has fewer employees, still consider creating an accessible business structure. Here are four ways that your small business can promote accessibility. 

Website

Web accessibility is typically one of the biggest issues for small businesses. If a customer cannot complete their purchase on your website because of their disability, your website is not ADA compliant. Web accessibility includes screen readers, text that is clear and easy to read, hierarchy, and keyboard navigation. This ADA compliance checklist breaks down many ways to have a compliant and accessible website. 

Signage

If your business creates its signage, it must be accessible. If your business outsources signage design, double-check that they comply with ADA standards. This includes text that is big enough to read and easy to understand. The colors that are chosen need to have enough contrast for people that have low visibility or color blindness. 

Business Accessibility

Provide accessible parking at your business. Make sure there is a wide ramp to get into your business if there is a step up. If there are tables or isles in your business, check to see if there is enough maneuverability space for people to get through. Businesses that have an up or downstairs need to have another way for people that are physically impaired to get around. This could be a ramp, elevator, or lift. 

Employees

Ensuring that your business is accessible to your employees is just as important as your customers. The ADA covers employees with disabilities that are qualified for their position. Keep your employees’ medical information confidential. Ask employees if there are any reasonable accommodations that they will need to be successful in their position.

Accessibility in Your Small Business

Making accessibility changes in your small business might cost money and take time, but it comes with added value to your small business. PL Consulting strives for accessibility for everyone, and we encourage your small business to do the same. Do not forget to check the ADA Compliance Guide for Small Businesses for further information.

 

PL Consulting offers a diverse range of bookkeeping and budgeting services. We are here as your business’s go-to resource when you have questions. Our services are customized to each of our clients and their business plans. 

 

If you have questions about managing a successful small business, call us at 410.764.3731 or book an appointment through https://calendly.com/michaelplc.

 

6 Tips For Family-Owned Businesses

Family-owned businesses start small, then grow into successful entities. Each family member has their vision of the business’s success. These owners work hard daily. If your family-owned business has been around for years or you are just starting, these 6 tips for family-owned businesses will keep your business running efficiently and prosperously. 

business man at desk

Networking

An important tip for small businesses in any industry is to make connections. These connections lead to strong relationships and loyalty. Relationships take time and effort to build. They can positively result in collaborations, discounts on materials/services, or shared experiences with suppliers. 

Trust

Trust goes beyond building strong relationships with your connections. Continue to trust your family members that you work with. If you hire employees outside of your family circle, make sure they are someone that the team believes in. 

Communication

Effective communication is key to a small business’s success. Find a way that works best for everyone to communicate. This could be weekly meetings, email, or phone calls. Since a small business can make decisions much quicker than a corporation, use that to your advantage. 

Unity

Families are brought together through unity, so keep the same unity when running a business together. When making a big decision, do it as a team. If that is not possible, consider how everyone will feel about it. It should not be hard to agree. Ensure that everyone is on board with how the business is running. 

Values

Every business needs core values and standards that they believe in. Many family-owned businesses base these values and standards on how their own family runs. These will make an ethical decision-making process involving customers, employees, and vendors. Values and standards entice customers to buy from your business.

Community

Family-owned businesses are more than just their own family. They include the community that surrounds them. This community includes new employees that are brought onto the team when the business starts expanding. The community also includes the area that the business is based in. People want to see your business support the city they live in. The purpose of a community is to keep unity with people that are both inside and outside of the family. Share your objectives and mission with everyone in your community to develop a cohesive business model. 

Success

Building a successful business with your family has trials and errors, but it is well worth it. This article covers some basic tips, but we know there is so much more to running a family-owned business. 

 

PL Consulting offers a diverse range of bookkeeping and other financial services. We customize our services to each of our clients and their business plans. Our one-on-one interactions are a valuable resource for both your team and ours. 

 

If you have questions about running a successful family-owned business, call us at 410.764.3731 or book an appointment through https://calendly.com/michaelplc.