I have always been interested in entrepreneurship. In college, I took several courses that dealt with starting and running a business. Though none of the material was exceptionally difficult, I was intimidated by assembling financial statements. One would normally think that being an engineer and otherwise being very proficient in mathematics, this wouldn’t be difficult. However, there is a world of difference between using math to solve an interesting problem and using math to keep a business solvent, feeding your family and keeping people employed.
Like many people I was intimidated by assembling income statements and balance sheets and left the creation of these documents by other folks who were in traditional finance fields. Looking back this is amazing since both income statements and balance sheets consist of nothing more than simple addition and subtraction. The most difficult parts of preparing financial statements usually comes in the initial setup when you do not have a history that will guide you in making predictions moving forward. Even in these instances, there are numerous ways one can estimate costs and incomes if one thinks things through. I would have given myself a tremendous advantage earlier on had I chosen to apply myself more in facing my lack of confidence and learn it.
Speaking plainly, you will never move forward financially until you learn to track your financials and make reasonable financial projections. You need to learn to track your income and outflow so you can effectively manage the challenges of spending today and projections are needed to manage the challenges of spending in the future.
