A Simple Way to Track Your Business Finances

Cash Flow & Balance Sheet

Cash Flow

  • Income — Proceeds from selling your offering (e.g., inflows, revenue, sales, earnings, goods sold, credits).
  • Expenses — Paying yourself, your employees, and service providers to run your business. Be sure to create a budget to estimate expenditures over time (e.g., outflows, costs, debits).
  • Capital Contributions — Investor money coming into your business.
  • Reinvested Capital — Recycled profits going back into your business.
  • Capital Distributions — Transferred money going out to investors. Note that this may also occur when your business terminates (e.g., dividends, redemptions, disbursements).

Balance Sheet

  • Assets — Owned items such as vehicles, real estate, computers, or intangibles like intellectual property.
  • Liabilities — Borrowed items such as loans/debt, lines of credit, or credit cards.

Performance / P&L

P&L Example for ACME BAKERY:

Profit & Margins

More P&L Definitions:

  • COGS (cost of goods sold) — Direct costs for the materials and production of your offering, plus the *direct* labor costs used to produce it.
  • Labor — Generalist employees, administrative costs like executive assistants, janitorial workers, and other non-production jobs that are excluded from COGS. This may also include labor insurance and labor taxes for larger businesses.
  • Supplies — Maintenance such as paper, pens, or staplers.
  • Rent & Utilities — Place of business and utilities such as internet or telecom.
  • Marketing — Branding such as your website, online presence, or business cards.
  • Gross Margin — Income minus cost of goods sold divided by income.

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Kaego Ogbechie Rust

Kaego Ogbechie Rust

CEO at KHOR Consulting, helping companies build business plans, pitch decks, and streamline their operations. Email: kaego@khorconsulting.com