Business Plans Kit For Dummies®, 3rd Edition

Chapter 8. Tallying Up Your Financial Situation

In This Chapter

• Understanding income statements, balance sheets, and cash-flow statements

• Looking into your financial future

Some people love adding and subtracting columns of numbers. And then there are the rest of us. Fortunately, most businesses owners don't have to do it themselves. They can turn to accountants. Small businesses and sole proprietors can turn to bookkeeping and financial forecasting computer programs. Even so, it's important to understand the forms those programs generate and the basics of sound financial management.

The discussion in this chapter helps you understand your business finances and all the jargon they involve. This chapter also makes you better at keeping an eye on your money, plus it tells you how to examine your financial situation and gaze into the crystal ball to forecast your company's financial future. As the recent economic turmoil has made painfully clear, not knowing your company's financial situation in detail can be disastrous. So bring out the calculators and get ready to talk finance.

Decoding Financial Terminology

People hyperventilate when they hear the term financial statements, as if someone just told them that the rest of the conversation would take place in an arcane foreign language with no translation assistance.

Note

Well, here's good news. You can master the language of business finance by understanding three key terms:

• Income statement: This report summarizes how much money your business ...