In the startup era, it’s easier than ever to launch a new business.
With barriers to entry for new ventures at historic lows, it’s now extremely common to see aspiring entrepreneurs from all walks of life – including many without any type of formal business training.
Financial Statement Basics
Accounting may not be a glorified part of the modern hustle, but today’s infographic from The Business Backer shows why understanding and interpreting financial statements is important for any founder.
Whether you have the next big idea or find yourself grinding away at a side hustle, understanding the basics of business accounting will help you prepare for the next step of entrepreneurial success.
A financial statement has three main parts: the balance sheet, the income statement, and the cash flow statement.
It’s worth noting that 82% of small businesses fail because they experience cash flow problems, so the latter statement is of particular importance.
What They Do
Here are the basics on each type of statement, and why they are important:
1. Balance Sheet
The balance sheet presents a company’s financial position at the end of a specified date. It provides a snapshot of a company’s assets, liabilities, and shareholders’ equity. This statement essentially shows what a company owns and owes.
2. Income Statement
An income statement is a report that shows how much revenue a company earned over a specific time period. This is perhaps the most intuitive financial statement, as it ultimately shows the company’s profitability – a metric that even the most accounting-allergic business owner would watch quite closely!
3. Cash Flow Statement
A cash flow statement reports the company’s inflows and outflows of cash during a period of time. A company can be profitable, but still be experiencing cash flow difficulties. If not enough money is coming in the door, or if there is a significant lead time to receive revenue, then it’s possible for a company to not meet its short-term liabilities.
24 Cognitive Biases That Are Warping Your Perception of Reality
The world isn’t as it seems—here are some of the most important cognitive biases that are messing with how you think the world works, and why.
We are each entitled to our own personal world view.
But unfortunately, when it comes to interpreting information and trying to make objective sense of reality, human brains are hard-wired to make all kinds of mental mistakes that can impact our ability to make rational judgments.
In total, there are over 180 cognitive biases that interfere with how we process data, think critically, and perceive reality.
Flawed Human Reasoning
There is no simple way to get around these basic human instincts, but one thing that we can do is understand the specific mistakes we make and why.
Today’s infographic comes to us from School of Thought, a non-profit dedicated to spreading critical thinking. The graphic describes 24 of the key biases that warp our sense of reality, providing useful examples along the way.
At the beginning of the infographic, you may have noticed illustrations of two gentlemen.
In case you were wondering, those happen to represent Daniel Kahneman and Amos Tversky, two of the leading social scientists known for their contributions to this field. Not only did they pioneer work around cognitive biases starting in the late 1960s, but their partnership also resulted in a Nobel Prize in Economics in 2002.
Biases Distorting Reality
Here are some of the biases we found most interesting from the list:
You remember the past as better than it was, and expect the future to be worse than it is likely to be. This is an interesting one, since statistically this is one of the most peaceful and prosperous times in history—yet the 24-hour news cycle rarely reflects this. (For a good example how the world is improving, see these six charts)
Just World Hypothesis:
Your preference for a just world makes you presume that it exists. Of course, it’s much more uncomfortable to think that the world is unfair, but by understanding this you will make more accurate judgments about people and situations.
If a conclusion supports your existing beliefs, you’ll rationalize anything that supports it. In other words, instead of willingly looking at new information, we are primed to defend our own ideas without actually questioning them.
Context and delivery can have a big impact on how a story is interpreted. We must have the humility to recognize that we can be manipulated, and work to limit the effect that framing has on our critical thinking.
The Curse of Knowledge
Ever try to explain something you know intricately and have worked on for many years? It’s hard, because you’ve internalized everything you’ve learned, and now you forget how to explain it. This bias is similar—you know something inside and out, and what is obvious to you is not to others.
Sometimes we all get the urge to do the opposite of what we’re told. Nobody likes being constrained. The only problem is that when we’re in this situation, there is a tendency to overreact and to throw any logic out of the window.
Because we each live inside our own heads, our natural focus is on what we’re thinking and doing. We project this onto others, and we overestimate how much they notice about how we look or how we act.
Want to see more on cognitive biases? Here are 188 of them in one infographic.
Which Countries Have the Most Similar Values?
Where you’re from greatly influencers how you view the world. Here’s a look at the core values in 94 different countries.
Which Countries Value the Same Things?
Our culture can have significant impacts on our belief systems and our values.
In fact, research has shown that our cultural influences can rewire our brains, which can impact our visual perceptions and how we view the world around us.
Because of this, where we’re from can greatly influence what we prioritize in life. This graphic by Anders Sundell illustrates the primary values of 94 different countries, and highlights which places share similar values.
Sundell used data from the World Values Survey, an international survey that interviews hundreds of thousands of participants from across the globe.
For the purposes of this graphic, Sundell focused on one specific section of the survey that asked respondents to rate various aspects of their life on a scale of one (very important) to four (not important at all). Six aspects were included: family, friends, leisure time, politics, work, and religion.
From there, Sundell calculated the median score for each country and identified their primary value, then grouped them based on their similarities. On this netgraph, each country is connected to three other countries that share the most similar values.
Generally speaking, countries that prioritize friends and leisure are concentrated on the far left of the graphic, whereas countries that value religion and work fall more to the right.
Each Country’s Primary Values
Interestingly, family came first for all 94 countries—except Indonesia, where religion was considered most important.
Because of this, Sundell identified each country’s primary value besides family, which was much more diverse across the board:
|Abbr.||Country||Continent||Primary Value (Exc. Family)|
|AR||🇦🇷 Argentina||South America||Work|
|BO||🇧🇴 Bolivia||South America||Work|
|BA||🇧🇦 Bosnia and Herzegovina||Europe||Work|
|BR||🇧🇷 Brazil||South America||Work|
|CA||🇨🇦 Canada||North America||Leisure|
|CL||🇨🇱 Chile||South America||Leisure|
|CO||🇨🇴 Colombia||South America||Work|
|CZ||🇨🇿 Czech Republic||Europe||Friends|
|EC||🇪🇨 Ecuador||South America||Work|
|GT||🇬🇹 Guatemala||North America||Work|
|HT||🇭🇹 Haiti||North America||Work|
|HK||🇭🇰 Hong Kong||Asia||Friends|
|MX||🇲🇽 Mexico||North America||Work|
|NZ||🇳🇿 New Zealand||Oceania||Friends|
|NI||🇳🇮 Nicaragua||North America||Work|
|MK||🇲🇰 North Macedonia||Europe||Work|
|PE||🇵🇪 Peru||South America||Work|
|PR||🇵🇷 Puerto Rico||North America||Work|
|ZA||🇿🇦 South Africa||Africa||Work|
|KR||🇰🇷 South Korea||Asia||Friends|
|TT||🇹🇹 Trinidad and Tobago||South America||Religion|
|GB||🇬🇧 United Kingdom||Europe||Friends|
|US||🇺🇸 United States||North America||Friends|
|UY||🇺🇾 Uruguay||South America||Work|
After family, work was the most valued, with 46 different countries identifying it as their second-highest priority. Friends came second, followed by religion, and then lastly, leisure.
Almost half of the countries on the list perceive work as the most important aspect of their lives, apart from family.
South American countries, in particular, put an emphasis on work, with seven of nine South American countries valuing work over friends and politics. The only outliers on the continent were Chile (leisure), and Trinidad and Tobago (religion).
Friends were identified as a top priority in 25 of the 94 countries on the list. Europe in particular valued friendship, especially in Norway and Sweden.
While these Nordic countries prioritize their existing friendships, research shows that they aren’t generally keen on making new ones. A global survey found that expats in Sweden, Norway, and Denmark found it extremely difficult to make new friends.
18 of the 94 countries ranked religion as a top value.
These countries, mainly in Asia and Africa, are predominantly Islamic except for a few. For instance, in Trinidad and Tobago, the largest religious group is Christianity.
Only five countries on the list ranked leisure as a top priority—Japan, Canada, Andorra, Chile, and Finland. Finland takes leisure seriously. Its capital, Helsinki, was recognized as the number one city in the world for work-life balance. And Canada’s capital, Ottawa, ranked sixth on the ranking.
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