You’re the Boss: Do You Know Enough About Accounting?

Eric Schultz for The New York TimesBart Justice almost lost his document-destruction business.

Today’s Question

What small-business owners think.

In a small-business guide to accounting that we’ve just published, Darren Dahl writes about Bart Justice, who started a document-destruction business, Secure Destruction Service, in 2004. The business, based in Huntsville, Ala., grew from $70,000 in annual revenue its first year to $500,000 four years later. To finance his growth, Mr. Justice kept borrowing money from the bank, not realizing that the more he grew, the more he needed to borrow because his revenue was not covering his expenses. The loans meant he had money in his accounts — but it was borrowed money. “I knew how to print a financial statement from QuickBooks, but I couldn’t tell you what it meant,” he said. It took the intervention of business owners in a peer group Mr. Justice joined to convince him that if he didn’t master his finances he was going to lose his business.

Have you had a similar experience? What’s the most important lesson you’ve learned about accounting?

Article source: http://feeds.nytimes.com/click.phdo?i=6113ef006f774508882c0ec513308682