Building a Business? Decide between the Balance Sheet way or the Profit & Loss way!

I've been involved in building, running, starting and closing all kinds of businesses for the past 25 years.

It's clear to me that in this age and time, when Entrepreneurs have many options and routes to take, they must be clear on 2 fundamental issues that I have always encountered.

These are presented below:

Special credit to Asha for lots of proof reading and editing!
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The link to the same PPT on Slideshare below:

Tags: Balance Sheet, Business, Profit and Loss, Starting Up

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Firstly, my apologies. I hadn't gone through the slides before commenting. So silly of me. I had formed an opinion on the two models based on the ongoing comments. BS way, as depicted in the slides, covers a wider area than I had initially thought.

I thought that with BS-model Alok was talking about un-tested businesses, like Instagram and Groupon, that have no profits but promise investors the sky based on transient assets like customers and popularity. Having gone through the slides, the distinction between the two models turned out to be different.

Treating customers as an actual asset is unheard of, outside the tech-scene. In the tech-scene, anything is possible; Groupon, rumors say, is doing something similar with its accounts. I heard that some e-com firms are treating product discounts as deferred expenditure. That is absolutely incorrect.

From a layman's perspective, there is no intangible asset that can be called an actual asset from accounting point of view. So yes, your balance sheet will have very few assets. But, cheer up as it will give you a very high Return on Investment; if you're not in the red, that is.

No worries Nishant :) but as general advice I would ideally recommend reading the posts, especially if its Alok's :)

I second you on the fact that some e-comm companies are treating discounts as deferred expenses which is completely wrong.

Thank you for providing the real accountant perspective ;) As of now we are bootstrapped & we dont sell on discounts, so we hope to break-even soon. Do visit my site www.stuffcool.com & give me your opinion at jeetu@stuffcool.com

:-) :-) 

:-)

Alok sir , some words instead of smileys :) can't read between smiles J

well, what can i say? thanks for being so supportive!

:) Thank you for creating Rodinhood

Dear Alok

Great insight and also a cute way of letting people know about the actual difference with a youtube example

Thanks

Sai

Thanks Alok for sharing this. Its a good eye-opener for aspiring entrepreneurs.

rodinhood baba, y dont u start working on something like golden handbook for global Entrepreneur. this is a religious material for every startup business man.. :)

Learnt a Lot from this Slide/s :)

Thanks for sharing this slides.

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