I’ve been running a small business for six years and I’ve finally settled on a simple way to answer these key questions: Are we making money? And if so, how much?

My business is incorporated, so I get paid as an employee and the business has a separate set of financials. I’ve always found it difficult to answer my own question of “How’d we do last month?” It gets kind of confusing because money flows in all different ways: regular paychecks, dividend withdrawals, profit-sharing plans (retirement/investments a. k. a. my 401(k)), and other business perks/assets (healthcare, company car, etc.). Sometimes the business checking account will be way up, but the next month it’ll be way down. However, it’s not necessarily down because of business expenses. Maybe it was time for a scheduled investment withdrawal, or we made a transfer to a savings account.

So what I started doing is on the first of every month I compile a list of all my “current cash and investment accounts.” It’s just a simple Excel sheet that looks something like this:

It adds all of your cash accounts like checking and savings, personal as well as business. Then it adds all of your investment accounts. I always enter these numbers at the exact same time every month. I do mine early in the morning on the first of the month so I’m getting my cash account and investment numbers for the close of business at month’s end.

Now this might look pretty simple, but in the myriad of financial statements you can generate, this is a straightforward indicator of whether or not you’re building wealth/value.

What about financial statements?

I have an accountant that gives me all sorts of valuable statements like an income statement, balance sheet, statement of cash flows, etc (or just use LessAccounting). Those are important, but one main problem is that my business and I are really one and the same. If I make a personal withdrawal from the business, my cash flow statement will show a deduction, but my personal account will show the addition. I want to know what’s going on overall.

It’s a good idea to keep your business and personal accounting separate, but if you own a small business, you want some way to track an overall value. Not that it should, but as far as I’m aware, there’s not any accounting software that will give you a snapshot across multiple companies/personal accounts.

Not representative of productivity.

One thing to note is that this is not an indicator of productivity on the previous month. You might have a killer month, but not get paid for it until the following month. It’s really about keeping track of added (or hopefully not reduced) value over the course of time.

Two indicators.

I like seeing the Monthly Change in value, but the main two I look at are the YTD Change and the Monthly Average.

The YTD Change

This metric lets me know overall if I’m adding value to my net worth. Over the last 12 months, did I build, maintain, or lose value?

The Monthly Average

This metrics lets me know on average how much extra cash (if any) I have available each month. It helps answer questions like: can we afford a new car payment, or can we increase our monthly retirement contribution, or can we increase giving to our church? As a small business owner, your income is far from fixed, so answering these types of questions is difficult. This indicator gives you a little insight.


I hope this helps small business owners out there. This is definitely no substitute for real accounting software and/or an accountant, but it’s a nice snapshot of where you are and how much you’ve grown.

Here’s the Excel file if you want to download and customize it for your own use. Let me know if you add anything to it or have other methods for your financial analysis.Here’s how to see a financial overview of your business and personal progress.Tweet This Article

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