When making financial statements, it is of significance that entrepreneurs know and interpret the information that each shows or tells. It is important because it helps to establish the goals for the business and see what to do if goals do not go the way that they are planned. “Do not shy away from financial statements because you don’t want to get under it,” Beth Filla expressed. This is a valuable lesson because having these statements will help the small business owner when it comes to making essential business decisions that will ensure the life of the business and growth in the long-term process. As Ms. Filla mentioned, “Financial statements help make many decisions, with a few being, when to hire, how to change methods and when or how to reduce costs. With that being said, Ms. Filla went into detail explaining the three types of financial statements which every entrepreneur should know and use, such as the following: Balance sheet, Profit & Loss Statement, and Statement of Cash Flows.

“Keep your income separate so that way it is more transparent of what your income and expenses are for your business,” explained Ms. Filla. A balance sheet is important because it helps entrepreneurs see the business assets and owner’s equity at the end of an accounting period. Therefore, it is of essence that business owners keep an accurate balance sheet so that way they can see their financial condition and what their business owns and what it owes. As Beth Filla went through the steps, she defined what each one was. “Assets are everything of value that the business owns, liabilities are the debts that the company owes and in order to find the value of your business, its assets minus liabilities.” Therefore, having a balance sheet is significant because entrepreneurs want to make decisions that will not have negative outcomes when it comes to their finances.

Another important financial statement that entrepreneurs must know how to do is a profit and loss statement. Thus, doing so will show the entrepreneurs their businesses performance and what position their finances are in. “Creating a value for your time is vital, so think about how much money you want to make and value it,” Ms. Filla explained, “Keep track of your money so that way you can see how much you have invested in your business and how much you have retained in your business. Ms. Filla also added, “When analyzing a profit and loss statement remember to note that the revenue and break even are different.” Revenue is at the top of the profit and loss statement and it is the income before any costs/expenses are subtracted from a businesses operations, whereas the breakeven point is the level of sales in units or dollars needed for a company to cover its expenses (Both fixed and variable).

When it comes to running a business, business owners also need to determine how much cash is generated and used during a specific period of time. This is another important financial statement called statement of cash flows. As Beth Filla discussed in the seminar, by having a statement of cash flows entrepreneurs can keep track of how cash enters their business and how cash leaves their business. It is beneficial when entrepreneurs use this statement to analyze changes in their cash flow from one period to the next so that they can see how their business is performing and or see where their business is heading; for example toward failure or success. “Note and keep track of your projections so that way you know where your business is heading and what changes need to be made,” Ms. Filla emphasized, “You can use the resource SBA.org to get excel worksheets to do your projections.” Beth Filla did an admirable job showing entrepreneurs how to understand that their business is meeting the financial goals that are needed for a successful future and how to determine which way their business is headed and what changes need to occur for a successful path. She went over the three common financial statements that entrepreneurs must know inside and out, which are the balance sheet, profit and loss statement and statement of cash flows. Entrepreneurs learned how to build each one of these statements and how to read the information that is contained within them. The entrepreneurs of this LAEDA seminar left prepared to utilize these financial statements and how to use each one to make key decisions when it comes to the success of their business.

LAEDA and LAEDA WBC host numerous seminars on a wide range of business topics. Seminars coming up include: LAEDA’s WBC- Google Analytics Workshop (Events) on July 11, 2017 at 5:00 PM and LAEDA's Quick Start Series En Español - Manejo de Crédito para Emprendedores on July 11, 2017 at 6:00 PM. For details visit our calendar of events.

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