Get Strategic with Your Financial Statements
This is part 3/3 of our Small Business Financial Basics Series, and in case you missed the first two, you can check them out here:
Part 1: Financial accounting fundamentals
Part 2: AR, AP, and why cash flow and profits are NOT the same thing
Today we're wrapping up with:
How to use Financial Statements as a Strategic Tool, Not Just a Record-Keeping Requirement.
Most business owners know they need financial statements. But fewer know how to use them.
At Breakaway, we believe financial statements should be more than a formality. They should guide your decisions, spotlight your risks, and reveal your path to growth. Let’s talk about how to make that happen.
What Are You Really Looking At?
When reviewing your Profit and Loss (P&L), Balance Sheet, or Statement of Cash Flows, you’re not just seeing numbers. You’re seeing:
Your revenue engine: Where money is coming from—and whether that’s sustainable.
Cost pressures: Rising supplier prices? Overtime pay creeping up? These show up in your margins.
Cash flow reality: Are you collecting fast enough to pay the bills? Your P&L might look great, but your cash flow can tell a very different story.
Debt and equity position: Do you have the flexibility to invest in growth, or are you already stretched too thin?
Knowing what to look for can help you avoid surprises and seize opportunities.
Why This Matters—Especially in Times of Change
Labor shortages. Supply chain delays. Material cost spikes. These challenges hit the bottom line quickly, and businesses that monitor their financial position closely are better equipped to respond. For example:
If your gross margin is tightening, that could point to rising input costs or production inefficiencies.
If you see that labor costs are rising faster than revenue, you can adjust staffing plans or pricing before it becomes a problem.
If your accounts receivable are dragging past 45 days, it may be time to revise payment terms or follow-up procedures.
When you're regularly looking at your financial statements and understanding what they mean, you’re able to act early—not react late.
The Key Is Frequency and Interpretation
Looking at your financial statements just once a month—or worse, only at year-end—isn’t enough. Business happens fast, and financial visibility should match that pace. That’s why we encourage more frequent review, ideally weekly, for cash flow, revenue pacing, and budget-to-actual comparisons. It doesn't need to be a full report every time, but a pulse check can reveal if you're on track or headed for trouble.
Weekly insights can tell you:
Are we halfway through the month but 75% through our expenses?
Is revenue lagging behind our targets, and if so, why?
Is our cash cushion strong enough to weather a sudden cost spike?
Our reports are driven by LiveFlow, powerful financial software that provides real-time awareness for informed, agile decision making. It's the difference between waiting for problems to show up on a spreadsheet, and steering clear of them entirely.
Your financial statements aren’t just historical records—they’re a strategic dashboard. Let’s make sure you're reading them that way.
Need help turning your financials into actionable insights? Visit breakawayba.com/contact-us and tell us about your business. We’d love to meet you!
