Wouldn’t it be nice if the bank balance was all you had to look at to know your cash balance? 

The Cash Flow Statement

What you really need to keep an eye on is a cash flow statement. The Cash Flow Statement is very important but easily forgotten when looking at financials. This statement will help you make decisions within your small business. Just like we check out a budget prior to buying most things, the same can be said about this cash flow statement. It’s a snapshot of your bank statement at a given time. 

The cash flow statement helps your small business be successful by showing if the business has enough money to pay taxes, loans, expenses, and purchase new small business equipment. Your business’s survival is contingent on having positive cash flow and understanding where the money is going on a weekly/monthly basis. 

Having a firm understanding of cash flow is the first step in avoiding business failure. As your business grows, more money will be flowing in and out. It’s very common for business owners to look the other way and avoid anything to do with numbers or the financial focus of their business. 

Cash Flow In; Cash Flow Out

An easy way to think about the cash flow statement is to think of cash flowing into the small business:

  • Memberships
  • Services
  • Product sales
  • Various activities/events 

The cash that flows out is usually:

  • Rent
  • Payroll
  • Taxes
  • Supplies
  • Various other operating expenses

Create Your Cash Flow Statement

A couple of things to think about once you have put your cash flow statement together. 

  1. Does anything stand out to you?
  2. What are some expenses that can be reduced or eliminated? 
  3. If your revenue increased and expenses stayed the same, what would your small business look like? Also, the reverse, if expenses increased and revenue stated the same.


Hopefully, you have a good idea of where your cash is going and can track it on a weekly basis.

We work on cash flow analysis regularly with our clients. Let me know if you’d like to schedule a call to help set up a personalized cash flow statement for your small business.