Author: Hank Lehrer
Date: 2020-04-16 17:48
Hi All,
All good suggestions above but IMHO, the necessity of knowing all about your "bottom line" can not be ignored.
Many individuals have the street sense to intuitively understand if they are or if they are not making money, so it is never wrong be able to do some of the simplest financial calculations. This is not rocket science and in many cases, there is a wealth of available software to assist you (spreadsheet prep is a must). Being able to read a balance sheet, do a net worth calculation, analysis cashflow, prepare a P&L statement are necessary tools to monitor the financial health of any enterprise.
While we tend to talk about "widgets" production, one can substitute any goods or services in most fiscal calculations; everything has a monetary value here. There are always fixed and variable cost. Doing a breakeven analysis as well as being able to figure the contribution margin of each cost center is imperative. In a music store example, such cost centers can be retail, repair, school rentals, music, lessons, school accounts, etc.
Above all, you need to know if you are making money or not! It is very common for startup businesses to be in the red at first but profits must be realized ASAP.
HRL
PS I assume you know you must have a business plan, right?
Post Edited (2020-04-16 17:49)
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