Posted by & filed under Accounting Careers, Financial Accounting, Financial Statement Analysis, Managerial Accounting.

Small business owners in Canada are a happy group, a new survey says. In fact, 62% of Canadian small business owners would describe themselves as “very happy” with only 1% saying they are “very unhappy.”

These are just some of the findings from TD’s Small Business Happiness Index, which examined the attitudes and behaviour of Canadian small business owners in seven urban centres. It  revealed that nearly 9 in 10 Canadian small business owners are happier owning and running their own business than they would be if working for someone else.

Why are small business owners so happy?
There are several reasons for Canadian small business owners’ high satisfaction levels. These include a sense of pride and accomplishment (97%) plus a deep personal connection to their employees (91%) and their customers (84%).

The challenges
As rewarding as it is, small business ownership also has its difficulties. The top three cited were managing, recruiting and training staff (24%), coping with stress and risk (23%), and financing and cash flow (22%).

  • Keep a close eye on the key metrics that are essential to your business’ success
    “It is impossible to analyze every part of your business every day.  Instead, ask yourself, what are those essential measures that determine the health of your company? Whether it is speed of inventory turnover, utilization rates or total cash in the bank, ensure you have a system in place that provides an easy way to check those numbers in real time.”
  • Understand how to read an income statement and balance sheet
    “Put yourself in the shoes of your investors, the bank where you would like a loan, or a potential buyer down the road and make sure you’re at ease with how to read — and explain — your financial statements.”

Forget the static five-year plan
“Given the speed of business today and the impact of ever-changing technology, a static business plan that lasts five years may be unrealistic. Your business plan should be a living document, updated at least annually with a rolling three-year forecast to make sure your business stays on track. And it’s essential to have both a long-term vision for your company and a series of short-term goals. 

  • Keep a close eye on the key metrics that are essential to your business’ success
    “It is impossible to analyze every part of your business every day.  Instead, ask yourself, what are those essential measures that determine the health of your company? Whether it is speed of inventory turnover, utilization rates or total cash in the bank, ensure you have a system in place that provides an easy way to check those numbers in real time.”

  • Understand how to read an income statement and balance sheet
    “Put yourself in the shoes of your investors, the bank where you would like a loan, or a potential buyer down the road and make sure you’re at ease with how to read — and explain — your financial statements.”

Forget the static five-year plan
“Given the speed of business today and the impact of ever-changing technology, a static business plan that lasts five years may be unrealistic. Your business plan should be a living document, updated at least annually with a rolling three-year forecast to make sure your business stays on track. And it’s essential to have both a long-term vision for your company and a series of short-term goals.

For more details read the complete the CA magagine article

Discussion Questions:

1. Why is it important for business owners to have financial accounting information?

2.For a business owner, would you conider having both knowledge of management accounting and financial accounting?

3. Would you consider the following ratios: Current Assets and Quick Ratios to be an important tool, to manage a small business?

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