Create a Theme for a Prosperous and Meaningful New Year

It’s almost 2018, and at this time of year, it’s natural for us to pause and reflect on where we’ve been and where we want to go.  For business owners, it’s especially important to raise our minds above the daily fires for a moment, take in some fresh air, and elevate our perspective.  Creating an annual theme is an easy and fun vehicle to do just that.

Deciding on a theme for the year will give you a focus and a new perspective on your work and your routines.   It can be highly rejuvenating to look at things through the lens of your new theme.

Ideas for themes are limited only by your imagination.  Some possible themes include:

  • Organizing, detoxing, or cleansing.   Consider cleaning out your garage (or your office), upgrading your systems, re-designing your filing system, or going on a cleanse or a vacation or a retreat that will leave you feeling clutter- and worry-free.
  • Growth.  You might want to consider a growth-related theme, such as productivity or profitability.  You might also want to develop a new skill such as learning a new language, developing your computer skills, or taking a philosophy class at your local junior college.
  • Abstract themes, such as abundance, creativity, or diversity.  At the risk of sounding a little fluffy, an esoteric theme might be just what you need in 2018.  A theme with abundance will allow you to think big, be abundantly generous with others, and search for large contracts.   A theme with diversity will challenge you to be more open-minded.  You may also want to consider forgiveness, gratitude, humility, or service.
  • Relationships.  Your year might be dedicated to meeting new associates and building business relationships.  Your action item might be to spend more time networking, participating in groups, or going to your industry conference.
  • A new service.  Perhaps you’re launching a new service and need to focus on developing this new line of business.
  • Giving back.  On a personal note, you might value volunteering and decide to organize your year around a couple of volunteer opportunities.
  • Exploring.  If you’ve retired or the business is starting to run smoothly without your day-to-day input, it might be time for that trip around the world.

As you choose your goals for 2018, make sure the majority of them support your theme for the year.  Themes can bring an overarching focus to our practices and our lives.

What’s your theme?  Let us know what your theme is and we’ll share ours!

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How to Read Your Balance Sheet

The Balance Sheet is an important report in your business’s financial statements.  Most small business owners are unsure of what all of the numbers mean on this report, so let’s see if we can shed some light on what they mean.

A Summary of Balances

One big characteristic of a balance sheet is that it represents one date in time, for example, 12/31/2014.  The numbers represent balances, and since the balances change daily, a balance sheet only represents one point in time versus a range.

Three Parts

There are only three parts to a balance sheet, and the easiest part to understand is the assets, or what you own.  Most balance sheets start off with cash balances, and these typically represent what you have in the bank less any uncashed checks that could reduce your account once they come in.

If customers owe you money that you have invoiced but not collected, you might see an Accounts Receivable balance on your balance sheet.

If you sell products, the cost of all of them that you haven’t sold yet and that you may have stored in a warehouse is in the Inventory account.

If you own equipment, furniture, cars or trucks or something similar that lasts for years, you will have a balance in Fixed Assets for what you paid for these items.   If it’s been a while since you’ve owned them, you may have a Depreciation account, and when you net the two, your Fixed Asset values are reduced.

All of the above are assets and they are listed in the first section of a balance sheet.

What You Owe

If you owe money for taxes, to vendors, or to employees, then it will show in the Liabilities section which is the second of three major sections of a balance sheet.  Day to day unpaid bills are in an account called Accounts Payable.

If you have bank loans, they usually each have a separate account like a bank account does.   Each bank loan account represents the principal due on a loan (the interest you pay goes to another place).

Equity 

The final section of the balance sheet is Owner’s Equity.  It is the section that will vary the most depending on the type of entity your business is set up as.  For example, if your business is a corporation, then there will be a common stock account which will represent the original amount of money you put into the business; it will match the Articles of Incorporation that you drew up when you incorporated.  This amount will rarely ever change for the life of the business.

There is also usually an account called Paid-in Capital which is how much additional money you’ve put in or taken out of the company beyond the common stock balance.

A corporation will also have a Retained Earnings account.  This reflects accumulated profit (or loss) through the years of operation.

If your business is set up as a partnership, the equity section will include an account for each partner that represents their balance in the firm, which is the net amount of money they have put into the business over the years plus or minus the business income or loss through the years.

Keeping It Simple

These are the very basics of the numbers represented on your balance sheet.  If you have questions about any of the numbers, please feel free to reach out and ask.

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