Understand your current position
Mar 30, 2016
If you do not know where you are now,
it’s going to be hard to get anywhere else.
When you set off on a journey, the first thing you usually do is find your destination on a map, then plan how you are going to get there. Along the journey you look out for landmarks to ensure that you’re heading in the right direction and making good progress. You may even ask for directions to make sure you are taking the shortest, most direct route to your destination.
It is the same for any business (or agribusiness!), big or small. You need to know your current position before you can plot the best route to get to your desired destination. Look forward. Plan ahead. Don’t dwell on the past and worry about how you got to this point.
By knowing where you currently are, you’ll be better equipped to change and control what happens in the future.
So what do you need to know? Understanding your current position requires an analysis of three things:
1. What you own = Assets;
2. What you owe = Liabilities; and
3. What you’re worth = Equity.
You need to fully account for your assets, liabilities, and equity to get a complete picture of where you are right now (financially speaking). For instance, having assets worth a few million dollars is great but not necessarily a good thing if your liabilities far exceed that amount.
it’s going to be hard to get anywhere else.
When you set off on a journey, the first thing you usually do is find your destination on a map, then plan how you are going to get there. Along the journey you look out for landmarks to ensure that you’re heading in the right direction and making good progress. You may even ask for directions to make sure you are taking the shortest, most direct route to your destination.
It is the same for any business (or agribusiness!), big or small. You need to know your current position before you can plot the best route to get to your desired destination. Look forward. Plan ahead. Don’t dwell on the past and worry about how you got to this point.
By knowing where you currently are, you’ll be better equipped to change and control what happens in the future.
So what do you need to know? Understanding your current position requires an analysis of three things:
1. What you own = Assets;
2. What you owe = Liabilities; and
3. What you’re worth = Equity.
You need to fully account for your assets, liabilities, and equity to get a complete picture of where you are right now (financially speaking). For instance, having assets worth a few million dollars is great but not necessarily a good thing if your liabilities far exceed that amount.