Why This Matters

Financial statements are not just documents for your accountant or lender.

They can help you answer questions such as:

• Is the business profitable?

• Are expenses increasing?

• How much cash do we have?

• How much do customers owe us?

• How much debt do we have?

• Is the business becoming financially stronger or weaker?

Owners who understand these basics can make decisions sooner instead of waiting until tax time.

Common Mistakes

• Looking only at the profit and loss statement

• Ignoring the balance sheet

• Reviewing reports without comparing periods

• Focusing only on revenue

• Assuming reports are correct without accurate bookkeeping

• Waiting until year-end to review financial performance

Harvest’s Recommendation

At minimum, review your financial statements monthly.

Start with three questions:

1. What changed?

2. Why did it change?

3. Is there anything we need to do differently?

Over time, you will become much more comfortable identifying trends and asking useful questions.

Good to Know

You do not need to understand every accounting term on the report.

Focus first on the numbers that directly affect how you run the business.

For many owners, that means revenue, gross profit, operating expenses, net income, cash, receivables, payables, and debt.

When It’s Time to Get Help

Consider getting help if:

• You receive reports but do not understand them

• Your financial statements are consistently late

• You are making major decisions without financial data

• The numbers do not seem to match what you see happening in the business

• You want to use financial reports for planning instead of just tax preparation