The 1 Reason Most New Business Owners Fail

I have a long standing career in Finance, Business Growth and Development for some 25 years.

Over this time, I have learned that most Business Owners who want to be successful in their new ventures, end up failing because they do not understand their finances and the business Financial Statements. They think, numbers are not their thing or they do not need to understand the finance side as they have engaged with an accountant, and never realise this is the most important piece of information when running a business and not fully understanding their financial statements is what’s actually holding them back.

Here are the main 3 items to look out for with your financial Statements:

• Income Statement: Revenue — Expenses = Profit. This will tell you if your business is profitable, if it is efficient and how much money has been made in the period. Understanding this section will let you know if you are successful and if not, show the costs that are preventing this.
• Balance Sheet: Assets = Liabilities + Equity. Shows how healthy your business is looking, how much cash your business holds and how much debt the company is in. It’s a breakdown of assets (vehicles, property, cash etc.) offset against liabilities (creditors, loans, tax etc.).
• Statement of Cash Flows: Starting Cash +/- Cash made/spent that period = Ending Cash. Shows the flow of cash in the business during the period under, Financing, Operations and Investment activities. This will show any capital raised in the business to support working capital as well as details of cash outwards to repay loans, purchase new assets, pay tax etc.

Overcoming change and learning new skills is a crucial part of succeeding, moving forward, and making actionable progress.

But don’t worry: we’ve all been there!

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