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Category Archives: Financial Reporting

Looking for Small Business Accounting Services

By | Accounting, Business By The Book, Finance, Finance & Accouting, Financial Reporting, Planning | No Comments
Looking for accounting services

Q: I have a small business with a handful of employees and, although I am not ready for a full-time accountant, I know I need better reporting and control of the company. Any recommendations for me? A: The good news is that in the virtual outsourcing world, there are numerous options for you to explore. One way to think about it is to organize the overall tasks in finance and accounting and decide which tasks you can easily perform and which ones you would prefer to outsource to a finance and accounting (F&A) outsourcer. A typical task list might be…

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Need Advice on Interpreting Financial Results

By | Accounting, Business By The Book, Finance, Finance, Finance & Accouting, Financial Reporting, Increasing Profitability | No Comments
Declining Net Income

Q: Over past 10 years, our service company’s Revenue and Long-Term Liabilities have increased while Retained Earnings, Equity, and Net Income have decreased. Any observations and/or counsel? A: While it is somewhat difficult to answer the question without additional information, the most likely scenario is that your Expenses are rising faster than your Revenue and — as an owner — you continue to take out the same salary/distributions that is affecting most or all of the Net Income and the shortfall is being made up by taking on more Long-Term Liabilities. To illustrate the point, here is an example of…

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How to Improve the Profitability of a Conference

By | Accounting, Business By The Book, Business Improvements, Cash Flow Management, Finance, Financial Reporting, Increasing Profitability, Organization & Strategy | No Comments

Q: My family has planned and managed a Christian family conference each year now for several years, but we end up losing quite a bit of money on each conference. We really feel it is of the Lord and that the conference is a blessing to many families, but it has turned into a painful financial experience for us. Do you have any advice you could offer us? A: There are two ways to improve the situation: to increase revenue and/or reduce expenses with the goal of never spending more than you are bringing in. Here are some specific suggestions…

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How to Read an Income Statement

By | Accounting, Basic Accounting, Business By The Book, Finance, Financial Reporting, Valuing a Small Business | No Comments

Q: What expenses comprise the differences between the terms “total revenue”, “operating income”, and “net income”? A: The easiest way to explain that is to walk through an Income Statement with you. Let’s use a really simple fictitious statement as the one shown below. Even though accounting is far more science than art, there are many terms for the same items and it can be confusing. For several of the main categories, I’ve shown in brackets and italics some alternate terms.   Explanations: Revenue – While the most common term to describe the amount of sales a company recognizes in the given period…

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Expect Negative Surprises When Acquiring a Business

By | Accounting, Business By The Book, Business Development, Buying a Business, Financial Reporting, Growth Strategy, Investing in Small Businesses, Negotiations, Ownership & Purpose, Selling a Small Business, Valuing a Small Business | No Comments

Some aspiring entrepreneurs will get started by buying an existing small business and many business owners have growth plans that include buying up other businesses to add larger chunks of growth via acquisition (mergers and acquisitions or “M&A” growth as opposed to “organic” growth). And if you are a business owner, you will most likely at some point sell your business. So here’s a few tips to both sides of the transaction… While it may not be statistically significant in terms of all the deals ever done, in my experience of negotiating with roughly 300 prospective sellers, signing approximately 75 letters…

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Why Do I Keep Losing Money in My Business?

By | Basic Accounting, Business By The Book, Cash Flow Management, Finance, Financial Reporting | No Comments

Q: I have a small owner/operator business where I offer five different services to my customer base: retail, rental, repair, onsite service work and storage. It is very difficult to manage my business month-to-month because it seems like its feast or famine with more “famine” months than “feast” months. I also feel unfocused and I am not sure what I should do to improve the bottom line. All of this has led to a lot of difficulty in our personal finances and home life as we struggle with bills and have had to declare bankruptcy a few years ago. Now we…

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