There are three accounting reports that every business owner should understand. Profit-Loss, Balance Sheet, Statement of Cash Flows. Most small business people that I have met only look at the Profit-Loss (P&L) and do not look at the other two. They are the three legs of a stool. The P&L tells you how much money you made (or lost), the Balance Sheet tells you what the balances are on your accounts (bank balances, monies owed to you and monies you owe to others), and the Statement of Cash Flows tells you where and how the Balance Sheet changed and where the money moved to.<p>If you are C level at your company, spend at least an hour a month understanding these three reports. If you don't understand something ask your accountant or Google. As the OP says, there are more than just employees jobs riding on these reports (or what they represent); their families are also depending on good numbers. Sometimes the reports are not good news - they key is not to fool yourself, but to understand the truth. If you understand the truth you can make better decisions. If you do not understand the truth, it is very hard to make a good decision.<p>Some days you are making money, but you have to wait for accounts receivable to get paid. Some days you have a bunch of money in the bank because of new funding, or a customer pre-paid, or you haven't taken care of all the payables yet. Just don't lie to yourself, and don't get lied to.<p>It is not that hard to understand the three reports; they are basic arithmetic and counting - the key is to just do it. Personally, I look at it every week after doing payroll. You can choose your own schedule, just choose one and look at all three reports. Even if you only do it quarterly, you will at least know what is going on.
<i>"A lawyer that you do not pay is not working for you"</i><p>I'm not sure I agree with this. If a lawyer agrees to represent you, they have a legal and professional responsibility to act in your interest regardless of who pays the bills. In the common case where they are also representing the person or company paying their bills, they should be clear on how a conflict would be resolved -- usually with wording along the lines of "in the event that a conflict arises, you understand and agree that we would terminate our representation of you, and we will assist you in finding other counsel".<p>The most important question to ask is probably "do you <i>represent</i> me, or are you merely <i>advising</i> me?" -- although a good lawyer will make that clear from the start in order to avoid any possibility of confusion.<p>(The above is not legal advice, and I am not a lawyer. I have however been a party to such joint representation.)
One of my mentors taught me that a company that dies has usually been killed at least six months before it knows it's dead.<p>He also beat a simple credo into my mind: if you think that there might be a problem, there's a problem.
"A lawyer that you do not pay is not working for you"<p>That's pretty good advice on a personal level - in the early days of a company it is easy to view your company's lawyer as "your" lawyer. However, as a company grows and has external investors you may reach a situation where your own personal interests do not coincide with those of the company - this can lead to rather unpleasant surprises!<p>I guess the trick is spotting the point where your own personal interests and those of "your" company diverge <i>without</i> spending huge amounts of money on redundant legal advice.
> By keeping [the CEO] out of the loop the CFO was able to hide the problems (including some irregularities involving private accounts and the corporate current account) from his partner.<p>Seems like you're saying a good way to go bankrupt is to have a criminal CFO. Aye, that will do 'er.
"Turnover is meaningless if more business decreases your profitability" -- So basic, yet so frequently overlooked.<p>You can't just "make it up on volume."