Monitor performance and adapt

Review your financial results regularly and use them to decide what needs attention. Your income statement shows revenue, expenses, and profit over a period.

Your balance sheet shows what the business owns, what it owes, and the resulting owners’ equity at a particular date. Your cash flow statement explains where cash came from and where it went.

Read these statements together and compare results with your budget and previous periods, accounting for seasonal differences. Investigate meaningful changes, such as growing sales accompanied by falling profits, and identify their causes.

Assign specific actions and responsibilities, then review the results to determine whether those changes are improving the business’s financial position.