Let's be real: even entrepreneurs with a finance degree can get overwhelmed managing business finances.

Why it matters: As business owners, we know financial management is key to success, but there’s so much else we have to get done— it can be easy to just ignore the numbers for a bit. This is especially true when you have multiple apps and accounts, with multiple logins, that you access from multiple devices.

So how do we make it a little less daunting and a lot easier to manage? Our key is visualization. In this post, we're giving you our guide to managing and visualizing your business financials every month:

  1. Create a Monthly Budget 📊 To start, spend a little time at the end of each month creating your budget for the next month. Make sure you include things that don’t change (like rent utilities, and loan repayments) and variable costs (like inventory and marketing spend). Unless you have good magic tricks, your budget should be lower than the amount you expect to make that month (and you should include that revenue projection, too). Over the first few months, see how accurate you’ve been, make updates to get closer to the expectation, and see if you can grow revenue faster than you increase the budget.
  2. Use Simple Financial Tools 🛠️ Now that you have a budget, it’s worth getting the most out of tools that let you track your cash flow and liabilities. At Bags (link your accounts here to get them visualized), our platform is focused on helping you keep track of the money you make, the liabilities you have, and your opportunities for growth. Accounting software is another place to see transactions and expenses. We suggest choosing the easiest system to navigate and understand, so you don’t have to poke around too much to get answers.
  3. Generate Monthly Financial Statements 📑 Leverage your financial tool to generate monthly financial statements, and always create an income statement (profit and loss statement) and the balance sheet. You should redo these every month, so it’s never hard to update. Nearly every lender will want to see these documents. It will save you a ton of pain if you keep these up to date and have them ready. For context, an income statement (or P&L) shows your revenue and expenses, while a balance sheet provides an overview of your assets, liabilities, and equity. Review the changes from month to month to understand your business's financial performance. Growing? Great. Shrinking? Can you see why?
  4. Visualize Your Data 📊 Nobody likes making charts. I don’t even know exactly how to do it. But charts are a super useful tool to see how things are going at a glance. Bar charts can help you compare monthly revenue and expenses, line charts track trends over time, and pie charts visualize expense breakdowns. You don’t have to make these yourself. Bags can show you these things right in the platform.
  5. Set Achievable Goals 🎯 Once you’ve seen how things are going, it’s time to start setting achievable goals for the business— things like increasing revenue, reducing certain costs, or upping your profit margin. Visualize your achievements and celebrate milestones along the way. Setting goals and visualizing progress keeps you motivated and focused on improving your financial health.

Even just adding items 1-3 to your to-do list can make a major difference. By creating a budget each month and with user-friendly financial tools like Bags, you can master your business finances and take control of your financial future.

We hope you found this guide helpful. If you have any questions or additional insights to share, please leave a comment below.

Here Is what we suggest reading next: Cash Flow Made Easy: Calculating Money In and Out of Your Business

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