Business Basics

     Every business no matter how small has to maintain records to know how healthy their business is. If you don’t know where your money came from and how you are spending it, then you don’t have a good understanding of your business. You as a business owner need to maintain business records so you know if you’re making or losing money. These records can help you understand your business better so you can change and adapt your business processes to earn more profit. Conversely, these records may be telling you that it’s time to shut it down or sell it. Maintaining these records is called “Bookkeeping”. This is how most businesses here in the Philippines account for their money. Other methods of maintaining these books are software programs or online web-based programs. I discussed some of these programs in a previous post Online Basics – Free online tools for a small business.

     Three fundamental reports help you decide how your business is doing. Where it’s doing well and how to improve the business in certain areas. These reports will be your guide and keep a trend history of your financial failures and successes. Banks will need this information if you are trying to get a small business loan so they can decide how much capability you have in paying them back. These reports will also be required when selling your business because it allows you to put a value on your company and you will be able to project future financial earnings.