Business Management

In Financial Accounting, Reporting for those outside the business, the 3 most important financial statements, relevant for budding entrepreneurs are:

The Statement of Financial Position or the Balance Sheet. The Statement of Income or The Profit & Loss Statement. The Statement Of Cash Flows.

The Balance Sheet shows the business’s assets, the liabilities, and the equities of a business. It is a ’snapshot’ of the business economic resources at a certain date. That is why when you see one, it says something like, The Statement Of Financial Position as at dd/mm/yyyy.

Unlike a Balance Sheet that is a ’snapshot’ of economic resources, the Profit and Loss Statement is a summary of the flows of earned revenues and incurred expenses of a business for a period of time. That is why when you see one, it says something like: Profit & Loss Statement for the year 200X.

The Statement of Cash Flows summarizes the ‘cash’ effects of the activities of a business for a period of time. These activities can be operating, investing and financing. The keyword that I would like to emphasize in the above definition is the word ‘cash’. It only records activities that involved the transfer of cash.

I can summarize the above even further:

Your Balance Sheet shows you what you own and how you acquired them. Your Profit And Loss shows you how much you are expending each period and how much you are earning. The statement of Cash Flows summarizes the exchange of cash in your operating, investing and financing activities.

I personally feel that for most freelancers, when starting a small business, attention should be placed on your Profit and Loss statement because that is your record of how much income is coming in and how much expenses is going out. Take a look at the revenue items there to know which activity is bringing in money and take a look at the expense items to see which ones are costing you the most and ask yourself whether those expenses are really necessary. Are there ways in which you could cut your costs?

Costs are what any entrepreneur has to control at the start of every business. No cost item should go by unnoticed or unmonitored. Their existence must be justified. Every dollar counts. Every dollar that gets tied up in one thing is a dollar that could otherwise be used somewhere else.

Direct sales can be a great way to start a home business, but how do you choose a company? Fortunately, it is not as difficult as it may appear on first glance.

The first thing you want to consider is what would you enjoy selling. It is possible to sell things for solely practical reasons, but it’s much more fun and often more profitable to sell something you are enthusiastic about.

Do not join a program just because your best friend joined it and wants you in her downline. If you love the program too, then go for it, but otherwise think things through carefully. You aren’t doing your friend a favor if you aren’t really interested in the business. You might even waste her time.

Now it’s time to consider the details of the program. First let’s consider the legal aspects. It’s the ugly side of things, and I like to get past it quickly.

Watch out for companies that practice “forced buying,” no matter the name they may call it. Forced buying means that you must purchase a certain amount of product in order to receive commissions, and it is illegal. It can lead you to having a huge amount of excess stock in your house and cause you to lose large amounts of money.

Watch out for exaggerated claims, either for the product or your income potential. This is a huge red flag. Make sure all claims are substantiated with hard evidence and watch out for shills.

Now take a look at the commissions. How much product will you have to sell to earn enough money for your needs? How realistic is it that you will be able to sell this much? This is one of those points you should go over carefully with your upline, and if they don’t have the answer, but you really love the product line, see if they can find out. Support from your upline is vital in direct sales, and if you aren’t getting it now, you won’t later either.

What are the products? Will you be using them too? Once again, if you are excited about the products, they will be much easier to sell.

Is your local market saturated with reps? If the competition is all over the place in your area, you’re going to have trouble selling.

Can you sell online? Can you design your own website or are you restricted to the one the company made for you? What does it cost?

Finally, beyond your upline, what sort of support does the company itself offer you? There will at some point be a problem where you will need the company to help you out, either with a customer’s order or with your business. Make sure the company is going to be there for you.