Sharing our recent article published in Franchise New Zealand Magazine –
People buy a business for many reasons: wanting to work for themselves rather than someone else; provide employment for the family; live in an area they choose; enjoy a different lifestyle; comply with residency requirements or any one of a hundred different reasons. Ultimately, though, everyone wants to make enough money to support the family, pay the bills at home, put something away for retirement and have an asset they can build up and sell when the time comes or pass on to a family member.
But one of the biggest problems facing anyone buying a business is getting their head around the numbers. That’s true for many people who have business experience, so it’s an even bigger hurdle for newcomers. No matter what your background, though, it’s worth taking the time to read the financial reports and understand what they actually mean before you make your mind up about any opportunity. In fact, it’s essential to making an informed decision.
And it doesn’t end there. The financial reports generated by your accountant and accounting software can help you evaluate how your business is doing, what it needs to grow and how you can make it perform even better. Learn to understand the numbers and you can build a better business.
In this article, we’ll talk about three key financial reports and what they can tell you about the business you are hoping to buy – or already own.
These are:
- Profit & Loss report
- Balance Sheet
- Cashflow Report.
It’s important to point out that this article won’t replace the need for you to get professional advice from a franchise-experienced accountant, but should help you to understand that advice when you get it.