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.”

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).

Understanding your company’s balance sheet is one of the most powerful ways to improve your financial literacy and make smarter business decisions. Yet many small business owners glance at it once a year—if at all—when meeting with their accountant. Let’s fix that.

For small business owners, financial literacy isn’t optional—it’s essential. Among the three core financial statements (balance sheet, income statement, and cash flow statement), the Balance Sheet offers a snapshot of your company’s financial health at a single point in time. It reveals what you own, what you owe, and the equity you’ve built in your business. Without understanding this document, you risk making decisions in the dark.