I want to understand my financials. Where do I start?

By PRETTY BOOKS ON July 25, 2022
DEAR ABACUS is an advice column where local bean counter Abacus the Accountant answers your small business accounting questions.   Hi, I'm Abacus the Accountant, your local bean counter and small business management whiz. In this series, I'll use my accounting know-how to answer real questions you have about running your small business, from how to price new products to hiring employees and more. Got a question? Email me:, subject line "Dear Abacus."

Dear Accountant,

I have an awesome accounting team. They send me my profit and loss statement every month like clockwork, which is great. When I get it, I usually just go right to the bottom of the page. I’m having trouble making sense of anything else. I try to read it and take it all in, but my mind just goes blank. And it’s not just the profit and loss. It’s really quite a few of the reports that I get from them. How do I start understanding these?

Sincerely, Profit and Lost



Dear Profit and Lost,

Financials are complex. On top of understanding what the numbers are, you’re also supposed to understand how it compares to your trends and what it means for your business. That’s tough! It sounds to me like you’re feeling a little disconnected from your financial reporting, which is normal.

Your team is giving you the reports, so it sounds like they’re crossing their “T’s” and dotting their “I’s.” That’s a good thing. That means your data is being recorded and reported, which is just what is supposed to be happening. You just need to invest a little time and energy into discovering what these reports mean for you and your business.

Find a confidant. It can be either your accounting team, a business coach, or a financial advisor you feel comfortable with. Work with them to interpret the numbers you see in your reports. Each one reflects something in your business, so investigate together to see what does what.

The next step is to make this a frequent exploration. Meet monthly, or even every other week. It may not come easy, but eventually you will start to see the connection between your numbers and your business. Then you’ll stop feeling so lost in your reports.

The end goal of clarity in your numbers is to give you the power to make better, more informed decisions in your business based on its current trends. But first you need to work at getting clear.

Good luck in your journey,


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The information provided in this post is for general informational and educational purposes only and is not a substitute for professional advice. Consult your financial, business, or tax advisor with respect to matters referenced in this post. Pretty Books assumes no liability for actions taken in reliance upon this information.
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