Understanding finance is very important for small business owners because it allows you to fine tune your business plan.
That enables you to identify opportunities, avoid risks and communicate better with people in the banking and business world.
For example, let's say you run a store and you find that 95% of your money goes into paying your expenses.
So that means it's quite risky.
You're cutting it fine, right?
But then you look and you find that most of those expenses are paying the rent.
Because you're in the middle of downtown.
So you might have an opportunity there, just relocate your store somewhere else and avoid that big expense.
And in case you perhaps need a loan to help with that relocation, then because you know finance you're able to speak with people in the banking world, you understand what they are saying and they have more confidence in you because you know their language.
And that's a big thing in business.
Another very important issue is staying within the law.
So, every business needs to pay tax.
And in order to calculate the tax correctly, you need to know the details of your financial statement.
Thus, if you understand your finances you can grow you business, avoid risks, you can stay within the law and you can free up more time and work more efficiently.
It's not hard or scary to get started at all.
Just head to the website business.govt.nz
Take the first step by reading the section on how financial statements work and then you can watch videos explaining it further like this one.
For more information head to business.govt.nz