Wednesday, October 15, 2008

You and Your Company

We all hold companies to high standards of financial reporting. When it comes to the publichly held companies, they must have standard reporting practices such as quarterly statements and GAAP accouting. They are stringently judged by analysts, speculators, investors and the market in general. If they don't do well in a particular quarter, the stock often drops (which brings up another concern for another time). On the other hand, if the company has strong revenue, low expenses, good accounting practices and reporting, usually a company and its stock will do well.

What about You?

For all the time you spend analyzing charts, ticks and reports, do you put in the same time and emphsis in your own "company?" You are a small (or large) company in and of yourself. You have revenue (income), expenses (expenses), and budgets to keep track of it all. Or you should.

If a company spends more money than it makes and it doesn't change or get help, it will go bankrupt. If you spend more money than you make, you too will go bankrupt. If a company doesn't keep records of its activities, it will not know how much or little it makes or has. The same with you. If you don't keep track of what you make or spend, you will have no idea if you have money or not. Is this a good way to go about something that is so important?

A company may seem more important becasue it is bigger and makes more money, but you are your own company and are importatnt to yourself or your family. Run your finances like a company. Hold yourself to high standards when it comes to taking note of what comes in what goes out, and how it goes out.

This leaves us with some final questions. In what state are your finances? Are you an Enron or a Google (GOOG)? Would anybody purchase shares in your company?

Would you?

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