Smalll business financial statements

Leveraging 3 Key Growth Startup and Small Business Financial Statements to Achieve Your Goals

In this article you will learn:

  1. What are the 3 key financial statements
  2. How to produce the 3 key financial statements
  3. Why they are important
  4. The top 3 ways to leverage the financial statements to achieve your goals

Why Do Growth Startup and Small Business Financial Statements Matter?

Let’s start with some statistics from the SBA.

  • 66% of businesses with employees will fail in the first 2 years
  • 50% of small businesses with employees will fail by the 5-year mark
  • 70% of small businesses with employees will fail by the 10-year mark

But why is this?

  • 82% experienced cash flow problems
  • 42% experienced a lack of market for the product or service
  • 29% ran out of cash 
  • 23% did not have the right team and place
  • 19% were outcompeted

Yikes, these stats are staggering and a bit scary. However, we believe that good financial statements will help you make smart decisions to build and grow your business. 

Before we move on, check out our several other blogs which address cash flow and team building here. They might give you some peace of mind.

Smalll business financial statements

What are the 3 Key Growth Startup and Small Business Financial Statements?

The 3 key financial statements are the balance sheet, the income statement, and the cash flow statement.

These financial statements should be provided in a timely manner (we recommend the 15th of the month for the previous month). It’s also important that they are accurate so we can use them to access the financial health of the business.

Here is a summary of each statement:

Balance Sheet

The Balance Sheet is a summary of the business at any point in time. It is a statement that shows all of the company’s:

  • Assets (cash & payable receivables)
  • Liabilities (debt & accounts payable)
  • Shareholders’ equity

This financial statement assists the reader with determining things like the company’s ability to meet its debt obligations, the cash reserves in place, or amounts owed to the company in the future.

Income Statement

The Income Statement is a statement that shows the profitability of a business over a period of time. It entails all revenue generated by the business, less direct costs, less operations expenses to determine net income or loss. 

This financial statement assists the reader in determining things like gross profit, net profit, and even certain marketing expenses needed to support revenue generation.

Cash Flow Statement

The Cash Flow Statement tracks the sources and uses of cash over a period of time. 

This financial statement assists the reader in determining where the cash went, such as paying down debt or having it tied up in accounts receivable.

How Are These Financial Statements Produced?

There are a few things that come into play to produce the financial statement. We believe the keys are:

  • People
  • Process
  • Technology 


In terms of people, you want to make sure you have the right people in the right seats. Typically, a bookkeeper or accountant does some of the tactical work to start the foundation of producing these financial statements. They will focus on the categorization of expenses, the reconciliation of the bank account, credit card account, and all other basic accounts. 

Then a controller-level person would step in to work on some of the more complex parts of the financial statement like revenue recognition and properly matching up revenue and expenses which is important to have a clear and accurate financial picture of the business. 

Note: Use this article to help you spot the difference between an accountant, controller, and CFO.


As for the process, it is key to getting the desired outcome month over month; from doing the basic categorization all the way to the month-end close. These processes should be documented and examined for efficiency. 

This will ensure consistency and accuracy in the production of the financial statements and plays an important role in the delivery of timely and accurate financial statements.


As it relates to technology, these financial statements are typically produced automatically in accounting software like QuickBooks Online or Xero. 

Note, there is a bunch of work that goes into producing these financial statements, even though they are automatically generated, which is why people and processes are important. However, the overall technology is pretty powerful and inexpensive.


Why Are These 3 Key Financial Statements Important?

We believe they will help you to become a stand-out instead of a statistic. The above-mentioned failure rates are scary and staggering. 

But fear not. 

We believe that these financial statements, and gaining control of them, will help you to make smart decisions to build and grow your business. So no more running the business based on your gut. You will have actual data to support decisions around “Can we afford to hire?” or “Should we invest in this marketing campaign?”. 

We have helped many entrepreneurs. No more confusion. No more sleepless nights. Just peace of mind by leveraging these 3 key financial statements.

Top 3 Ways to Leverage the Financial Statements to Achieve Your Goals

1/ Compare your monthly profit and loss statement to your budget. 

This budget versus actual analysis will help you to determine if you are on track or off track with your annual financial goals. The good news is that if you are off track you know early on and you can create a plan to get things back on track.

2/ Review your monthly balance sheet over a period of time for trend analysis. 

Specifically the cash account. Set a goal around building up your cash reserves to cover a few months of expenses like payroll. Then each month review the cash balance to ensure that the cash balance is increasing month over month to support your financial goal of building cash reserves.

3/ Review your monthly profit and loss and drill down on the actual gross profit percent. 

This is the profit you are making on the goods or services you are selling. Consider creating the ideal gross profit percent and create a plan like increasing prices or negotiating supplier costs to reduce costs and watch this gross profit increase over time.

Smalll business financial statements

Achieve Your Goals with New Economy CPA

Mining value from your financial statements can help you achieve your goals. 

At New Economy, we help entrepreneurs gain control of their finances and make smart decisions by producing and analyzing the information provided in the three key financial statements. 

With our help, you’ll have financial peace of mind. 

We hope this article helped you better understand the three key financial statements, but we don’t want to leave you empty-handed. Try out this free Cash Flow Projection Tool for help managing your cash flow.