If someone asked how your business is doing today, how would you answer? Many business owners immediately look at one number, the balance in their bank account. While it’s certainly important to know how much cash you have available, your bank balance doesn’t tell the whole story. You might have a healthy balance today because a large customer finally paid an invoice, or you may have just purchased inventory that won’t generate revenue for several months. Your bank account shows where you are today. Key Performance Indicators (KPIs) help you understand where your business is headed. KPIs are simply measurements that help you evaluate the health of your business. They allow you to spot trends, identify potential problems early, and make decisions based on facts rather than assumptions. The good news is you don’t need dozens of reports, you only need to focus on a handful of numbers that truly matter. Gross Profit Margin One of the first numbers every business owner should understand is gross profit margin. This tells you how much money remains after covering the direct costs of providing your product or service. If your gross profit margin begins to shrink, it’s often a sign that material
Why Financial Reports Matter Most owners did not start a company to read financial statements. Yet, your reports tell the story of your business far better than your bank account ever could. You do not need an accounting degree to understand the basics. Mastering three core financial statements allows you to spot issues early, make smarter decisions, and have more productive conversations with your advisor. 1. Profit & Loss Statement (Income Statement) Your P&L acts as a report card for a specific period, answering one critical question: “Did my business make money?” 2. Balance Sheet While P&L tracks performance over time, the Balance Sheet offers a snapshot of your financial standing today. 3. Cash Flow Statement A profitable business can still run out of cash because profit and cash are not the same thing. Look Beyond Revenue It is easy to celebrate growing sales, but revenue alone tells an incomplete story. Regularly ask yourself: Evaluating all three statements together provides a complete picture of your financial health. Track Trends, Not Just Single Months Financial statements become powerful when compared over time. Instead of asking how you did this month, look for trends: Spotting these trends early reveals opportunities—and problems—long before
Why Undercharging is a Hidden Threat Many business owners worry that raising prices will scare customers away, so they keep rates artificially low to stay competitive. Unfortunately, low pricing often creates bigger problems than it solves. If your prices do not reflect your true costs and the value you deliver, you will find yourself working harder, earning less, and struggling to fund future growth. The Hidden Costs of Undercharging Lower prices bring in business, but they rarely create a healthy company. When prices are too low, you risk: Low Prices Send the Wrong Message Many assume lower prices automatically attract more buyers. In reality, pricing communicates value. Customers often associate extremely low prices with lower quality, less experience, or fewer resources. Competitive pricing does not mean being the cheapest option; it means charging an amount that reflects your expertise, service, and results. Know Your Numbers Before Raising Prices Price increases should never be based on guesswork. Review your financials to understand: If your expenses have risen while your prices have stayed the same, your profit margin has quietly shrunk overtime. How to Announce a Price Increase Most customers understand that business costs are changing. The key is being transparent, professional,
One of the first difficult decisions you must make when starting a business is choosing your business entity type. It can get confusing to research what the differences are and what each entity means. I will be breaking down each one below so that you’ll have a better understanding of just what you can set up. What is a Business Structure? A business structure is a legal/government classification which determines several factors in your business. Your type of entity determines the type of taxation used for your business, the personal liability attached to it, and lastly how much and what type of paper work you must file. These factors can become obstacles if you choose the wrong entity which is why it is important to research before your form one. Of course, you can always change your entity in the future, but it usually involves a lot of confusion between your business and IRS! Sole Proprietorship A sole proprietorship is the most common entity used by small businesses because it can often be the simplest. It’s formed with minimal paperwork in some states and absolutely none in others. Due to there only being a single owner, this person has complete
If you’re thinking about or just started your business, we want to tell you about a valuable resource. This resource is dedicated to small businesses and provides counseling, capital, and contracting expertise and is the the nation’s ONLY Federal go-to resource and voice for small businesses. What is the SBA and what does it stand for? The Small Business Administration, or SBA, is an independent government agency which intends to provide support towards small businesses and entrepreneurs. They do this to promote growth, recovery, and confidence within small businesses. SBA was created in 1953 becoming the only federal agency fully dedicated to help small businesses. How is the SBA organized? Headquarters Offices These offices are a little of everything. Therefore, they are broken down intro offices of advocacy, contracting, counseling, disaster assistance, financial assistance, international trade, and management. To add onto this, they also share small business audiences to make people feel included and supported. In this section they have Women’s Business Ownership, Office of Native American Affairs, and Office of Veterans Business Development. Regional Offices This page provides additional support to find an exact location. This provides you the ability to find what you are looking for in an