Tuesday, January 18, 2011

Could an Accounting Class Help?

On my website I readily admit that although I can help you in almost every aspect of retailing, if understanding your financials is your weak spot I'm not your guy. So you can imagine how I've been over the last few weeks.

Our accounting software finally bit the bullet. We've been using the same software since 1998, even though the software became obsolete in 2005 and the company disappeared in 2006. Hey, if it ain't broke, why fix it? But the software wouldn't allow dates beyond 12/31/10. Time to make the change. I spent December 27th and 28th with my accountants updating everything to the new software.

Our fiscal year is about to end. More meetings with the accountants are on the horizon.

While my accountants are absolutely nice and wonderful people, why must they insist on speaking in a foreign language? I still struggle to remember if I add debits and subtract credits or is it the other way around?

Most independent retailers I know have the same struggles. Reading financial statements like the Balance Sheet and Profit/Loss is like reading a Chinese road sign. But in my quest to always improve myself, I have made it my goal to grow my understanding of all things accounting in the retail world (with the exception of taxes - I'll tackle that next year).

I could take an accounting course, but all my friends who have done this warn me that it is backwards. Bank accounting - on which these courses are founded - is opposite of retail accounting. Huh? How stupid is that?

So instead I'm going to learn it the way most entrepreneurs do - self-taught one chunk at a time. And, yeah I plan to share what I learn right here. So look for a little more on the financial side of retail this year. Together, we'll both become experts.

You with me?

-Phil

PS Credits are added, Debits are subtracted (I think)

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