Larry Chester, President of CFO Simplified, has served as a CFO for 25 years for companies including Colovos Company, Republic Windows and Doors, United Service Companies, and High Sierra Sport Company. His job in doing so? To help them eliminate losses and improve financial operations and reporting.
His experience considered, Larry has had the opportunity to observe various businesses and entrepreneurs who started their own companies. In addition to countless other things, Larry has interestingly learned why people start businesses. In fact, he believes there are three reasons why people start businesses.
Here’s what they are.
According to Larry, people start businesses for one of three reasons.
#1: They start a business because they have a passion for a product and want to get it out to a customer base.
#2: They have a passion for a customer base and they want to serve that customer with whatever they need.
#3: They have a passion or an understanding of a channel of distribution and they want to exploit that to make money.
It’s doubtful that an individual earns an MBA, then turns around and says, “I can read a financial statement, let’s start a company!”
So, what’s the key? As an entrepreneur, you need to understand what is happening within your business.
When starting and maintaining a business, you want to work from an operations perspective. This might look like:
Business, however, is a numbers game—and unless you can understand what the numbers are telling you, you’re in deep trouble.
Why? Because somewhere down the road you’ll reach a point where you need to make decisions, and you won’t understand what you need to do to make the right decision to:
a) get your company to the next level, or
b) get it out of trouble.
Understanding the numbers behind your business doesn’t have to be as painful as pulling teeth. This is why many companies hire a fractional or part-time CFO to help.
Get in touch with our team at CFO Simplified today if you’d like to start understanding or get a better understanding of your business’ numbers. Then, check out our blog post on how to read your income statement with ease.
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