3 Essential Financial Reports to Review Monthly for Business Growth

Are you ready to take your business to the next level? Well, grab your coffee and buckle up! Here are the three financial reports you should be reviewing every month—because who doesn’t love a little number crunching?

1. Balance Sheet: Think of this as your business’s financial health check-up. Kind of like going to the doctor, but with less waiting and no awkward small talk.

• Current Ratio: This is your business BMI—how fit are you at paying those short-term obligations? No gym memberships needed!

• A/R Turnover: Aim to reduce the days it takes to get paid, which helps eliminate payroll panic. (Trust me, panic doesn’t look good on anyone.)

• Leverage Ratio: If you’re in growth mode, knowing this number is crucial. It’ll help ensure you’re not the last to get paid. Sacrificing your own compensation? Not the best strategy—unless you’re planning to live off instant ramen.

2. Profit & Loss Statement: Analyze this as a percentage of revenue—because numbers without context are like a pizza without toppings: kind of bland!

• Revenue: Track your various revenue streams. Don’t let them drift away like your New Year’s resolutions.

• COGS as a % of Revenue: Understand the cost of goods sold relative to sales. Spoiler alert: It’s not free!

• Gross Profit Margin: This helps gauge your profitability—like checking your blood pressure, but less stressful.

• Top 3 Expense Items: Keep an eye on these, including payroll. Remember, it’s a marathon, not a sprint!

• Net Profit Margin: The ultimate indicator of your profitability after all expenses. This is the moment when you can finally treat yourself to that fancy coffee!

3. Budget-to-Actual Report: This is your roadmap to financial accountability. And we all know how easy it is to get lost in the numbers jungle!

• 12-18 Month Forecast: Build a comprehensive forecast and input it into your accounting software. It’s like planning your vacation, but with more spreadsheets.

• Measure Against P&L Numbers: Regularly compare your budget to actual performance. Think of it as checking your GPS—are you still on the right track?

• Net Profit Margin: Consider debt payments and taxes. For revenues under $1 million, aim for a minimum target margin of 30%. You’ve got this!

By consistently reviewing these reports, you’ll gain valuable insights into your business’s financial health and make informed decisions that drive growth. And who knows, you might even impress your accountant!

Ready to elevate your financial strategy? Let’s connect and discuss how you can run a thriving business and pay yourself competitively.