How to Read Financial Statements (Even If You Hate Numbers)
Let’s get one thing out of the way: you do not have to be a math person to run a successful business.
But if you want to keep your business profitable, tax-ready, and growing in the right direction: you do need to understand your financial statements.
We’re not talking spreadsheets filled with jargon or pages of numbers that give you a headache.
We’re talking about simple, clear insights that help you answer questions like:
“Am I actually making a profit?”
“Can I afford to hire help?”
“Why is there money in my account, but I feel broke?”
If you’ve been avoiding your financial reports, this post is for you. Let’s break down how to read financial statements for small business owners….even if you hate numbers.
🧾 What Are Financial Statements, Really?
Financial statements are the story of your business told in numbers.
They show how much you’re earning, what you’re spending, and how financially healthy your business really is.
There are three key financial statements every small business owner should review monthly:
Profit & Loss Statement (P&L)
Balance Sheet
Cash Flow Statement
Let’s walk through each one—in plain English.
📊 1. Profit & Loss Statement (P&L)
Also called the income statement, this report shows your business’s income and expenses over a set period (usually monthly, quarterly, or yearly).
💡 What it tells you:
Are you making a profit or loss?
What’s driving your revenue?
Where is your money going?
🧠 Key sections to look at:
Revenue – total money earned
Cost of Goods Sold (COGS) – what it costs to provide your product or service
Gross Profit – revenue minus COGS
Expenses – operating costs like rent, software, marketing
Net Profit (or Loss) – what’s left after all expenses
💬 If your net profit is consistently low or negative, it’s a red flag: either you’re spending too much or charging too little.
📄 2. Balance Sheet
Your balance sheet gives you a snapshot of your business’s financial position at a single point in time. Think of it like a selfie of your money.
💡 What it tells you:
What your business owns (assets)
What it owes (liabilities)
What’s left over (equity)
🧠 Key parts:
Assets – cash, inventory, accounts receivable, equipment
Liabilities – credit cards, loans, unpaid bills
Equity – the difference between assets and liabilities
💬 If your liabilities are growing faster than your assets, you might be relying too heavily on credit to keep your business running.
💵 3. Cash Flow Statement
This one is all about timing. You can be profitable on paper but broke in real life if your cash flow is off.
💡 What it tells you:
Where cash is coming from (sales, loans, investments)
Where cash is going (expenses, salaries, taxes)
Whether you’re gaining or losing actual cash
🧠 Watch for:
Consistent negative cash flow (means you’re spending more than you bring in)
Big swings that could signal payment delays or seasonal dips
Whether cash in your account matches what your profit & loss says
💬 Cash is king. If you run out of cash, even if your business is profitable: you can’t pay bills, staff, or yourself.
🧠 How to Actually Use These Reports (Without Getting Overwhelmed)
Reading your statements is only helpful if you know what to do with them. Here's a simple monthly routine:
Skim your P&L
Is your revenue trending up?
Any unexpected spikes or drops in expenses?
Look at your Balance Sheet
Is your cash decreasing while debt increases?
Any old unpaid invoices piling up?
Check your Cash Flow Statement
Are you burning through more cash than you’re bringing in?
Ask yourself:
Can I afford to reinvest, hire, or expand?
Should I cut costs or raise prices?
💡 At Breakspears Bookkeeping Services, LLC, we not only provide these reports: we explain them in plain, actionable terms so you can make confident decisions.
🙋♀️ What If You Still Don’t Understand Your Reports?
That’s okay. Most small business owners don’t learn this stuff in school, or even when starting out.
But now you know:
These reports aren’t scary
They don’t require financial genius
They’re essential to building a business that lasts
You don’t need to master them, you just need to look at them regularly and know who to ask when something doesn’t make sense.
🧾 Final Thoughts: You Can Hate Numbers and Still Understand Your Finances
If you’ve ever said, “I’m just not a numbers person,” you’re not alone. But ignoring your financial statements won’t make the problems go away.
Understanding how to read financial statements for small business gives you the power to make smart decisions, grow sustainably, and sleep better at night knowing exactly where your money’s going.
📌 Want Help Making Sense of Your Financials?
At Breakspears Bookkeeping Services LLC, we don’t just keep your books: we help you understand them.
We provide:
✅ Easy-to-read monthly reports
✅ Friendly breakdowns (no jargon)
✅ Personalized advice to help you grow
👉 Explore our bookkeeping packages
👉 Book a free intro call and let’s demystify your numbers together.
