Skip to 0 minutes and 9 seconds OK, so for me, it’s really important to monitor the health of my business. And I do that by leaving all the high finance terminology to the experts, namely my accountant and my bookkeeper, and I focus on the profit-and-loss statements. That’s what helps me really run the business as efficiently as I can.
Skip to 0 minutes and 30 seconds In order to keep my business healthy, it’s important for me to know exactly what’s going on. And if I don’t understand where we are financially, then I don’t understand my business. I think that that’s really important. I monitor my business regularly. Financially, I look at the bank statements. I look at our accounting package, and I constantly check to see what’s going out, what’s coming in, and where our expenses lie. So investing in an accountant and a bookkeeper is absolutely essential for me. Benchmarking can be quite difficult for online businesses like ours. Our model is really quite unique, and we have evolved and changed accordingly.
Skip to 1 minute and 8 seconds So we look at other educational products and other streaming services, and we benchmark ourselves against them.
How financials help your business
After you produce financial reports what do you do with them? They are required for compliance with government, to help borrow funds, to see if the business is profitable or how well it uses its resources.
Reports can be presented to compare current and previous periods, to check variances for any trend or pattern, or to investigate why this is happening.
Variances can be favourable or unfavourable and can be presented graphically e.g., line or bar graph, This makes it relatively easy to compare against previous periods, budgeted (future) periods, or against industry benchmarks.
You now understand that financial reports help you with compliance, support funding needs, and snapshot the overall health of your business.
In the Comments area, discuss how you might monitor your business performance if you did not use your financial reports as your benchmark.
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