Profitable on paper... or in reality?

Know Your Numbers: Why Reviewing Financial Statements Matters

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Your financial statements tell the story of your business… where it’s been, where it’s going, and how healthy it really is. Too many business owners rely on bank balances alone, missing the bigger picture hidden in their reports. Reviewing your statements monthly isn’t just about compliance, it’s about making smarter, faster decisions.

There are three key financial statements every business owner should review regularly:

• Profit & Loss (Income Statement):
  This shows revenue, expenses, and profit over a specific period. It tells you if your business is actually making money and where it might be bleeding it. Tracking trends here helps identify high-cost areas, declining margins, or opportunities to increase pricing or reduce overhead.

• Balance Sheet:
  This snapshot shows what your business owns (assets), owes (liabilities), and what’s left over (equity). Reviewing it helps you understand liquidity, debt load, and overall financial strength. A healthy balance sheet shows steady asset growth and manageable liabilities… a red flag one shows rising debt or dwindling cash reserves.

• Cash Flow Statement:
  Even profitable companies can fail without steady cash flow. This report shows how money moves in and out of your business from operations, investing, and financing. It reveals whether your profits translate to cash or if you’re constantly short despite solid sales.

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Together, these statements provide a complete financial picture. Reviewing them monthly helps you plan ahead, spot warning signs early, and make informed decisions before small issues become major setbacks.

Numbers don’t lie, but they can mislead you if you’re not looking at the full picture. Take time each month to review your statements, understand your trends, and act on what they tell you. That’s how you move from guessing to leading with confidence.

Not sure what to look at or how to go about this? Reach out and schedule a call with me today through www.guernseyconsulting.com.

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I have a high focus helping other vets out there and want you all to succeed, so I created this Skool group below called the Profit Platoon. Would love to have you there!