Chapter 3

Figuring Out the Figures


Bullet Understanding the main accounting reports

Bullet Making sure your books balance

Bullet Evaluating financial performance

Bullet Getting to grips with pricing

According to statistics from the Office for National Statistics (ONS), the five-year survival rate of new businesses in the UK in 2022 is 38.4 percent. That means that two in three start-ups don’t make it to their fifth birthday, and a third don’t make it to their second birthday. Some sectors, particularly those that need any form of premises or equipment, have even lower survival rates. Nursing homes, despite obvious demand, have double the average failure rate. Putting this information right at the front of this chapter is not intended to put you off starting up. Rather, the aim is to reinforce the vital importance of understanding finance. Poor financial management is consistently rated as one of the top three reasons why businesses fail, and is at least as likely a reason for failure as finding too few customers.

Every business needs reliable financial information for both decision making and ...

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