Financial Statements

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IRS Strikes Out

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Next week marks Major League Baseball's 2011 "Midsummer Classic" — the All-Star Game between fan favorites from the rival National and American leagues. Baseball is making the usual headlines on the field this year, with tight races in most divisions. And it's making headlines off the field, too — especially in Los Angeles, where Dodgers owners Frank McCourt and his wife Jamie are contesting an especially bitter divorce.

Frank McCourt is decidedly behind the count in this at-bat. He's accused of borrowing more than he could afford to buy the team in the first place, then using the team as a personal ATM to finance an extravagant lifestyle. That lifestyle included seven homes costing just over $99 million — two houses on Cape Cod, two houses next door to each other on Malibu's famed "Millionaire's Beach," two more houses next door to each other in LA's affluent Holmby Hills neighborhood (right down the street from the Playboy Mansion), and a $6 million condo in Vail.

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Use financial ratios to review your Company's results

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Financial ratios can be helpful tools in understanding your company’s financial health. They are a benchmark by which you can compare your business to industry standards and analyze changes over time.

In fact, benchmarking and comparing to your competition is so important to business success that I provide all my business clients with an annual report on the benchmarks and results for their particular industry or profession. Without this it can be like traveling back roads without a map.

One warning though. If you begin comparing your results and calculating your ratios with incorrect accounting information from your business you just may wind up making the wrong decisions. All of the financial review and performance measurement we can discuss is of no use if your business's basic

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Discounting is Dangerous

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Offering a discount in the heat of negotiations may seem like a good idea at the time but thoughtless discounting is an easy way to lose money fast.

Before you succumb to the temptation to win new business by offering a discount take a moment to consider these ten problems associated with discounting.

  1. Discounting eats away profit margins!

  2. Negotiating a discount focuses the customer’s attention on your price. If your only competitive advantage is price you are in trouble because price can always be matched by a competitor. The focus should be on the benefits of the product to the customer that make the price, if not

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Building Your Loan Package

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If you're ready to ask your bank for a business loan -- whether for a credit line or a term loan -- before you make your request be sure you have your ducks in a row. This is your chance to demonstrate to your banker that you're a sophisticated business person well worthy of the loan.

So, how can you help your loan process along? Make sure you have all the following documents and information ready to go.

Business profile. This document describes your business, including annual sales, number of employees, length of time in business, and ownership. A very important part of this profile is the professional resume of you, the owner.

Business plan. If you're a new business this document

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Perils of Unplanned Expansion

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When sales are increasing and new opportunities can be sensed, many a business owner’s thoughts turn to expansion. But unplanned expansion can be as detrimental to your business as no growth at all. Fast growth can destabilize a business giving its owners a false sense of well-being while the additional revenues eat up more operating dollars than expected. If expansion is on your agenda, keep these things in mind.

Watch Your Overhead

The biggest danger in expansion is the erosion of a low overhead structure by unjustifiable purchasing or from simply being too busy to keep track of what is happening. Overhead expenses that were under control in the stable business situation now grow rapidly to cover extra expenses associated with a