book review: are you numberphobic?By
Many small businesses fail because the owner doesn’t understand the financial and accounting scope of the business. The mere mention of accounting statements sends many business owners into a panic. In Accounting for the Numberphobic: A Survival Guide for Small Business Owners, Dawn Fotopulos takes the fear out of accounting by presenting financial statements and measurements in plain English so that any small business owner can understand them.
Fotopulos discusses each document (income statement, cash flow statement, and balance sheet) in a very understandable manner and provides practical steps for the small business owner to use these statements. For instance, with better understanding of the income statement, the business owner can make better product/service pricing decisions in order to achieve a good profit margin. At times, the material in the book might be too simplistic for the professional accountant, but it’s exactly what nonaccounting business owners need.
With real business examples taken from her own experiences, Fotopulos explains the importance of understanding the difference between income and actually having the cash available to pay the bills. She explains the relationships between the income statement, cash flow statement, and balance sheet and how they all work together to get the complete picture of the business. This is necessary in order to maintain proper cash and profit for the business to survive. One chapter explains what bankers look for when they review these statements so that owners can be prepared when applying for loans.
Fotopulos covers basic ratios and percentages to help small business owners identify financial patterns of the business and make necessary changes in the business. The end of each chapter has a bulleted list of the key takeaways, which can be referenced quickly and can serve as useful reminders. Fotopulos concludes with a chapter about an interview with Norm Brodsky, “Street Smarts” columnist and senior contributing editor for Inc. magazine. This final chapter provides another perspective of why it’s important for small businesses to survive and for the business owner to understand the financial aspects of the business.
Overall I highly recommend the book to any small business owner, and it’s a great resource for any accountant who’s trying to explain accounting and financial statements to a nonaccountant. This very important process, which is part of every business, doesn’t have to be dreaded and feared.