My name is Mac Gardiner and as you probably already know, I am currently an intern involved in the Liberal Arts Bridge to Business program at Wabash College for the summer of 2015. We have just completed our second week of the program, which was an intensive and interactive week focused on finance. The financial boot camp was ran by Will Weber, an alumni from the class of 2011. Mr. Weber ran us through the three essential documents that a business will need in order to function: a balance sheet, income statement, and cashflow. When examining these documents, we spent a particular amount of time focusing on factors a small business start-up would have to consider.
On Thursday, May 28, after spending the first two days describing the functions the three financial statements served, we began to construct one for an imaginary shoe store we were beginning. Before we did this exercise, I never realized just how many factors have to be considered when beginning a business. For a simple shoe store, we had to generate our number of employees, hours opened, location, pricing for the shoes, how much it cost for us to sell the shoe, and many more factors. As we began to think of an aspect we would have to consider about the business, three more seemed to pop up. It gave me just a glimpse of how much research and time spent developing ideas has to go into simply beginning a business, let alone running it when it is started. There are many different factors that must be considered before even opening the store.
After we had developed our different factors, we began to assign costs to each one. Now, if you were beginning your own business, these numbers would be figured through countless amounts of research of the market you are entering into. For our sake, we estimated values based on our own experiences. After assigning costs, we could finally construct an income statement in an Excel spreadsheet. Excel allows you to easily calculate values and change the numbers depending on different scenarios. Once we had built our expected income statement, we could then build out our other two financial statements, the balance sheet and cashflow.
Going through the financial aspects of running a business will force one to define their market, the product they are selling, and above all else, appropriately define for themselves what there business will be. It forces you to develop the other aspects of your business appropriately because in order to have an accurate financial prediction, you must define what you are doing. This week of finance has been very eye opening to say the least. When running a business, at the end of the day it all comes down to the dollar figures and how you are generating more of it. Going through and understanding the three essential financial statements any business needs truly helps one get grasp on the entire ins and outs of business itself. I would like to thank the Lilly Endowment for giving me this opportunity to further my knowledge in finance and business in general.