Create Tools and a Reporting Dashboard for Managing Family Inc.

The first step toward effectively analyzing and managing Family Inc. is to develop monthly, quarterly, and annual financial statements. Compiling these statements monthly is a helpful process. Like someone on a diet, the more regularly you measure your progress, the more likely you are to stick to your plan. The basic Family Inc. financial statements, which can be customized and modified over time to fit the individual needs of your business, must include a balance sheet and a cash income statement. Just as a securities analyst evaluates a corporation’s health by analyzing the ratios in its financial statements, a Family CFO can develop valuable insights into the quality and management of Family Inc. These statements should be shared every year with numerous constituents—potential heirs, financial advisers, the trustee of an estate, or others to ensure they are up to date in case the Family CFO becomes incapacitated.

This chapter includes some examples of these statements and associated metrics, beginning with a family’s monthly income statement. Your income and expenses will differ, of course, but these examples provide templates that are a starting point for monitoring your own situation. To personalize these templates to fit you and your family, see A word of reassurance to nonfinancial readers: Because this chapter provides working tools, it necessarily gets into a finer level of practical ...

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