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Financial Analysis Simplified

Tracking the financial status of your small business should be a top priority, but it can be daunting to get started. This post will explain the basics of financial data and provide a guide for you to build your bookkeeping system. Use the free printable worksheet at the end of each month to help you see where your business is improving and create action items for the next month. There’s no point in having all your data organized in one place if you aren’t going to learn from it, so be sure you come up with at least one action to take each month to improve your business.

**This worksheet is to help track financials using the cash method, which is the easiest way to get started if you have no bookkeeping experience.

Section 1: Descriptions

Revenue (Money In)

Write down all the money that came in this month. It’s helpful to break revenue into categories relevant to your business. For example, an event planner might track weddings and corporate events separately. These categories will be different for every business, so use whatever makes the most sense. Remember, you can always add or remove categories as your business changes.

Expenses (Money Out)

This category includes everything you spend money on, from payroll to paperclips. This is one of the more daunting pieces of your business, so the next blog post will discuss expenses in greater detail. For now, we will just talk about expenses directly related to your services.

You can go one of two ways for expenses that relate directly to a specific event. Direct expenses can be broken down into either the type of thing purchased (flowers, catering, venue rental) or the type of event (wedding or corporate). For example, if you buy flowers for a wedding, the charge could fall under either “floral expense” or “wedding expense”. The specific categories depend on what will give you the most relevant information when you need to make decisions for your business. In general, the more detail you have, the better you can make decisions. However, if breaking your bookkeeping system down into great detail will make it a chore, you will be less likely to actually stick to it. Take some time this week to write down a couple ways you could categorize your events, then choose the one you think will be the best for you.

Accounts Receivable (Someone Owes You Money)

In business, there is nothing worse than doing all the work for someone, then not getting paid. What would be even worse is to realize that you never even billed them for your service. Accounts receivable is the section where you keep up with who owes you and how much they owe. I suspect you already have some kind of system for billing your clients. If so, take a look at how old the unpaid bills are. If they are very old (more than 90 days), you might have to assume they will never be paid. If they are a little old (30-90 days), you should contact the person/business to remind them that they have a bill outstanding. If all your receivables are less than 30 days old, keep up the great work!

Accounts Payable (You Own Money to Someone)

This section goes hand in hand with expenses. If you order supplies or rent a venue, they may not require full payment up front. Any invoice you receive from a vendor will go under this category. Most businesses require payment within 30 days, and some will even give you a discount if you pay with a shorter time frame like 10 days. If you are paying all your invoices in less than 30 days, you are in very good shape. However, if you have invoices that are past due, make sure you pay them as soon as possible. You may even be able to work out a payment plan with the vendor, if you contact them.


If you wrote down all the above categories correctly, you should be able to tell how much cash you have available using the following formula.

Beginning Balance (Cash in the bank on day 1)

+Revenue (Cash in)

-Expenses (Cash out)

Cash In The Bank

+Accounts Receivable (Cash owed to you)

-Accounts Payable (Cash you owe)

Cash Available

The distinction between cash in the bank and cash available is important. Imagine you have $2000 in the bank, but you owe $5000 for a venue rental and no one owes you money. Unless you really hustle to get business in the first few days of next month, you might not be able to pay your bill on time. This is why tracking all four of the above categories is so important. Keeping a close watch on your finances on a regular basis will prevent these scary situations from happening. It can give you an idea of what you need to do to help your business thrive, not just avoid paying bills late.

Section 2: Tracking

To track individual transactions, use whatever method works best for you. The easiest method to get started would be to have a notebook or spreadsheet with a page or two for each of the following: revenue, expenses, accounts receivable, and accounts payable. For revenue and expenses be sure to note the category. For AR and AP, track when each bill is created and when it is paid. If you have trouble keeping up with all your transactions, you might want to consider hiring a bookkeeper to help you. Use the Financial Review Worksheet at the end of each month to summarize all your data, so you can easily analyze your business.

Section 3: Taking Action

The reason for regular financial reviews is to help you see what your business is doing well and what needs to be improved. After filling in the Financial Review Worksheet, look closely at each category and subcategory. Do any numbers look unusually high or low? Make sure the numbers are correct. If they are, see what caused the change. For example, if your revenue is much higher than usual, see what you did right and create action items to help you keep up the good work. If expenses are through the roof, brainstorm ways that you could lower them next month. Remember, you need to have actionable and attainable goals each month for your financials. Write these action items on the Financial Review Worksheet, then make a plan to keep yourself on track. At your next financial review, look back to see if you completed your action items.


Reviewing your financials takes lots of practice, so don’t be discouraged if you feel a little overwhelmed at first. During this entire process, remember why continuing your business is so important to you. If you can make even one improvement, the process is totally worth it. If you’re feeling really overwhelmed, feel free to email me. I’d be happy to answer any questions you might have while building your bookkeeping system.