It is not a crime if you hate figures. But the reality of life is that, you need figures to run your life and manage your business. You deal with figures everyday – whether you like it or not! You want me to give examples? Okay.
Assuming you are a salary earner, you wake up early in the morning, heading to your office. You work throughout the day and later in the evening come back home. You have at the back of your mind why you are doing what you are doing. By the end of the month, you are given your salary. The salary is definitely in figures. You will need to calculate how much you are going to set aside for feeding, accommodation, clothing, children’s school fees etc.
Figures enable you to explore, discover and utilize your secret financial assets and enable you to discover opportunities and take advantage of them. Look at every genuinely wealthy people from generation to generation; they develop their love for figures.
This section dealing with explanation of accounting and Financial Business Record Keeping basics will introduce you to some basic financial and accounting principles, Financial Business Record Keeping concepts, and terminologies. Once you become familiar with some of these terms and concepts, you will feel comfortable navigating through the explanations, drills, puzzles, and other features of how to navigate your business financial problems and challenges.
Some of the basic Financial Business Record Keeping terms that you will learn include revenues, expenses, assets, liabilities, income statement, balance sheet, and statement of cash flows. You will become familiar with Financial Business Record Keeping debits and credits as we show you how to record transactions. You will also see why two basic Financial Business Record Keeping principles, the revenue recognition principle and the matching principle, assure that a company’s income statement reports a company’s profitability.
In this explanation of Financial Business Record Keeping basics, we shall often omit some Financial Business Record Keeping details and complexities in order to present clear and concise explanations. This means that you should always seek professional advice for your specific needs and circumstances.
We shall also introduce simple and convenient ways of keeping your record on day to day, week to week and month to month to you.
But before we go into that, let me show you what your finance and record keeping is to your organization. As an individual, blood is so important that without blood, no man, or woman can survive. There is no business that can survive without adequate flow of money. Not only that, you should be able to generate money, create money, retain it, manage it and multiply it. These secrets I will be revealing to you here will help you to do all these.
Financial Record Keeping is likened to a steering wheel of a vehicle. The vehicle is likened to the business. No matter how sound the engine, chassis and every parts of the vehicle are, if the steering wheel is faulty, the vehicle may be heading to the ditch.
Just as the steering wheel is small compared with the whole vehicle, the system of financial record keeping and accounting is often ignored by small and medium scale business people. “Let me make the money first before talking of record keeping!” they often concluded. By the time the money start coming in, they are unable to manage it and retain it. Very soon, the whole money is gone.
You will observe that the control of a vehicle, no matter how big it is will be found on the driver’s seat. By the side of the steering wheel, you have the rear mirror that shows you your immediate past. You are able to view the back through this mirror. Why? Because you need to know what your past is like, know the present position, so that you can forge ahead. This is exact service a financial record keeping will do for you.
A hypothetical story for Relating to Financial Business Record Keeping Basics
Let me present the basics of Financial Business Record Keeping through a hypothetical but true story of a person starting a new business. The person is Glory Peterside (not the real name)—a savvy man who sees the need for a parcel delivery service in his community. Glory has researched his idea and has prepared a business plan that documents the viability of his new business.
Glory has also met with an attorney to discuss the form of business he should use. Given his specific situation, they concluded that a limited liability company will be best. Glory decides that the name for his company will be Direct Delivery Ltd. The attorney also advises Glory on the various licences and government certificates that will be needed for the new company, especially on tax matters.
Glory is a hard worker and a smart man, but admits he is not comfortable with matters of figures, Financial Business Record Keeping and money management procedures. He assumes he will use some Financial Business Record Keeping software, but wants to meet with a professional accountant before making his selection. He asks his banker to recommend a professional accountant who is also skilled in explaining Financial Business Record Keeping to someone without the Financial Business Record Keeping background. Glory wants to understand the financial statements and wants to keep on top of his new business. His banker recommends Gbolagoke, an accountant who has helped many of the bank’s small business customers.
What did they discuss at their first meeting? Where they able to sort out Glory’s puzzle? What advice(s) did Gbolagoke give to Glory? Please join me in the second part of this article as I take you step by step through their discussions. Watch out for Figures & Financial Growth Part 2 on this section of the eZine, Business –> Financial Management it at this Till then I say God bless you.
James Olu Gbolagoke is a Chartered Accountant, a Financial Consultant, a Pension Practitioner, an Investment Adviser, a Pastor and an Entrepreneur. He is the Executive Director of Gbola Empower Consult and BizExpert Consult. He consults, teaches, trains and develops small business owners and their staff. He can be reached on firstname.lastname@example.org. He can 234-802-311-7940, 234-807-059-0705.