How to Analyze a Profit and Loss Statement as a Small Business Owner

Some small business problems lurk beneath the surface; others wave a red flag that’s impossible to miss. Cash flow problems can be the hardest to ignore. They feel big because they are. In the earliest stages of a new business, people are often heavily focused on cash. Much like living paycheck to paycheck, new business owners have a tendency to check their bank balance frequently to make sure they have enough money to keep the doors open, the lights on and employees paid.
But once you’ve reached a more sustainable place, where you have enough cash to keep the business running, you can start looking at the money in your business with a different level of detail. You see things that happen monthly, seasonally, ups and downs in sales—things you won’t see by looking at your checking account.