How much is invested in your business?

A common question that can cause unnecessary confusion for business owners is “How much is invested in your business?”.  The same business owner can typically tell me approximately what their house is worth or how much they have invested in their share portfolio but they struggle to confirm how much is invested in their business.  This is a problem, because it is very difficult to understand how much return you are generating if you don’t know how much is invested.   So why is this so difficult?  The answer lies in the traditional balance sheet which is not presented in a way that is easy to interpret and certainly does not readily tell us how much is invested in the business.

Have a look at this short screen cast for some insight to how the executives of DuPont addressed this issue over 90 years ago.  Their insights have become common practice in public companies around the world but are still not understood by most private companies.