Issue #8 What depreciation actually means for a business A small printing shop in New York bought a commercial offset machine in January for $60,000. Cash went out the door once. The owner felt the hit, signed the paperwork, and got back to running jobs. Twelve months later, his bookkeeper handed him the year-end P&L. Net profit was $48,000. The owner frowned. He had taken home far more than that. The bank balance agreed with him, not the report. Then his bookkeeper pointed to a line halfway...
5 days ago • 4 min read
Issue #7 Revenue vs Income vs Profit A bakery owner walked into her accountant's office last December with a grin. Sales had crossed $480,000 for the year, the best she had ever done. She wanted to talk about expansion, maybe a second location, maybe hiring a full-time baker. Her accountant pulled up the income statement, scrolled past the top number, and pointed to the very last line. $12,400. That was the actual money left over after flour, butter, rent, wages, packaging, the delivery van...
9 days ago • 3 min read
Issue #6 What Is Working Capital and How to Know If Your Business Has Enough In March 2020, a restaurant group in London was fully booked for the spring season. Revenue was projected to be their best year yet. On paper, the business looked healthy. Accounts receivable were solid, inventory was stocked, and the books showed profit from the previous quarter. Then lockdown hit. Within six weeks, they could not cover rent. Not because the business was failing long-term. Because they did not have...
12 days ago • 4 min read
Issue #4 What Is Owner's Equity and Why It Changes Every Month A lot of business owners track revenue religiously and ignore everything else. Sales go up, they feel good. But revenue alone doesn't tell you if your business is actually worth more than it was six months ago. Owner's equity does. Owner's equity is what's left in the business after you pay off everything you owe. If you sold every asset and cleared every debt today, the remaining cash would be your equity. That's it. The formula:...
19 days ago • 3 min read
Issue #3 Every financial decision comes down to this one idea. A few years ago, a friend launched a small clothing brand. She had a good product, decent early sales, and genuine excitement about where the business was heading. A few months in, her bank approached her about a small business loan to fund her next inventory order. The bank manager asked a simple question: "Can you walk me through your assets and liabilities?" She froze. She knew the words. She had heard them a hundred times. But...
23 days ago • 4 min read
Issue #2 How to tell if a business is secretly struggling (in 3 questions) A small business owner gets approached by an investor. Exciting moment. The investor asks to see the balance sheet. The owner sends it over with confidence. Revenue is growing. Sales are up. Everything seems perfectly fine. Two weeks later, the investor passes. The feedback is short: too much debt, low liquidity, declining equity. The owner had no idea what any of those words meant. And that gap in understanding cost...
26 days ago • 4 min read
Issue #1 Profitable businesses go broke. Here is exactly how. The accountant sends over the monthly financials. The numbers look great. Revenue is up. Expenses are under control. Net profit is sitting at $20,000 for the month. The owner reads the figure, exhales with relief, and then opens the business bank account. The balance shows $800. Confusion. Then panic. Then the question that every business owner eventually asks: "Where did the money go?" This happens repeatedly, in small businesses...
30 days ago • 3 min read