1. The Myth: Your Accountant Will Tell You Everything You Need to Know Many small business owners believe this: “I don’t need to worry about my finances—my accountant will tell me everything I need to know.” It’s a comforting thought, but it’s one of the most dangerous accounting myths in business. While accountants are critical partners, they’re not mind readers or full-time financial strategists living inside your books.

Let’s be honest—many small business owners start their companies out of passion, not accounting expertise. They’re experts in their craft, not in reading financial statements. But in today’s economy, that’s no longer good enough. In my opinion, financial literacy should be a mandatory skill for every business owner, just like knowing how to market or manage people. You can’t delegate what you don’t understand, and the number of entrepreneurs who fail because they don’t grasp

Compound interest is the process of earning (or paying) interest on both the original amount and the accumulated interest from previous periods. In simple terms, it’s “interest on interest.”

Clear financial goals turn guesses into a plan. With deliberate Goal Setting you can prioritize spending, time, and talent; with solid Financial Planning you can track progress, course-correct quickly, and communicate where the business is headed—to your team, lenders, or investors.

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It’s a financial metric used to measure your company’s core operating performance—essentially, how profitable your business is before accounting for financial structure and non-cash expenses.

The difference between cash vs accrual comes down to when you record income and expenses. Under the cash method, you record income when you receive money and expenses when you pay money out. Under the accrual method, you record income when it’s earned (even if you haven’t been paid yet) and expenses when they’re incurred (even if you haven’t paid them yet).

Financial Ratios turn complex financial statements into simple, actionable performance metrics that reveal the health of your business. They help you answer questions like: Am I making enough profit for my level of sales? Can I afford to take on new debt? How efficiently am I using my assets or inventory?

The Rule of 72 is a simple formula used to estimate how long it takes for an investment to double based on its annual rate of return—or, conversely, what rate of return you’d need to double your money in a certain number of years.

In simple terms, fixed costs stay the same no matter how much you produce or sell, while variable costs change depending on your business activity. Fixed Costs: Expenses that remain constant month to month (e.g., rent, insurance, salaries). Variable Costs: Expenses that rise or fall with production or sales (e.g., raw materials, packaging, shipping).

A Financial Dashboard turns scattered reports into a single, at-a-glance view of your Key Metrics. With it, you can spot trends early, make faster decisions, and align your Pricing Strategy, cash flow, and growth plans—without drowning in spreadsheets.

Profit margin measures how much money your business keeps as profit after paying for all expenses. It’s typically shown as a percentage of your total revenue. Here’s the basic formula: Profit Margin = (Net Profit ÷ Revenue) × 100

Most small business owners set financial goals—but few track them effectively. Without consistent goal tracking, progress gets lost in day-to-day chaos, and small problems compound into big surprises at year-end. Tracking your goals monthly helps you: Maintain financial discipline Catch variances early (before they turn into crises) Make data-driven decisions on spending, hiring, and pricing Build confidence in your long-term financial plan

Business Equity is one of the most important — yet often misunderstood — financial terms for small business owners. Understanding what it is, how it’s built, and how it grows over time can help you make smarter decisions about reinvesting profits, taking on debt, or planning your eventual exit.

What Financial Info Do Lenders Look For? When you apply for a business loan, lenders look for proof that your company can repay what it borrows . This typically means they’ll request detailed Loan Docs  showing your business’s income, expenses, debts, assets, and credit history. Expect to provide financial statements, tax returns, and documentation that demonstrates stable cash flow and responsible money management. Why This Question Matters Whether you’re applying for a smal

A Fiscal Year is a 12-month period that a business uses for financial reporting and budgeting. It doesn’t have to match the calendar year (January 1 to December 31). Instead, a company can choose any consecutive 12-month period that best aligns with its operations — for example, July 1 to June 30 or October 1 to September 30.

Many small business owners believe that profit equals cash. They see a positive number on their profit and loss statement and assume that money is sitting in the bank, ready to spend. Unfortunately, this is one of the most dangerous misunderstandings in small business finance.

Every small business owner needs to know the number that separates profit from loss — your breakeven point. It tells you exactly how much revenue you need to cover your costs before you start earning profit. Understanding this number helps you make smarter decisions about pricing, budgeting, and growth.

Building strong business credit is a foundational step for any small business owner who wants to access financing, favorable supplier terms, and safeguard their business’s financial health. When your enterprise has a solid business credit profile, you’re better positioned to secure loans or lines of credit, obtain favorable terms from vendors, and separate your company’s risk from your personal credit.

Revenue is the total money your business earns before any expenses are deducted. Profit, on the other hand, is what’s left after all costs — like payroll, rent, taxes, and supplies — are paid. In short: revenue is the top line, while profit is the bottom line on your income statement.

Net Profit—also called Net Income—is the amount of money your business actually keeps after paying all of its expenses. Think of it as your company’s true “bottom line.” It’s what’s left after you subtract operating costs, interest, taxes, and any other expenses from your total revenue.