Do you aim to build a long-term, sustainable, sellable and valuable business?Want to know what separates experienced entrepreneurs from new ones?The answer is simple.Experienced entrepreneurs spend time every month reviewing their financials.Keith Cunningham, ‘Rich Dad’ of Rich Dad Poor Dad and 9 figure entrepreneur/investor teaches the importance of ‘Thinking Time.’Thinking Time is exactly what it sounds like – taking time to…well, think. And if you want to build a sustainable, long-term business, what is the most important Thinking Time of the month? Your monthly financial review.

You’d be shocked to see just how many ‘successful’ businesses out there don’t know their actual numbers. Maybe their business is a mess and their numbers are all backlogged.Maybe they have a bookkeeper – but their team doesn’t give them the information in a way that’s digestible and easy for them to review and take action. Maybe they have good books and reports but don’t take the time to review them.Don’t be like most biz owners. Get on top of your financials starting with a Monthly CEO Report.

What’s in a Monthly CEO Report?

A Monthly CEO report includes three core financial statements: Profit and Loss Statement, Balance Sheet, and Cashflow Statement.Your Profit and Loss Statement will have the most helpful information, so you’ll spend some extra time with that one.

Review Your P/L

The first thing to review is your last month’s Profit and Loss Statement. Your P/L breaks down your revenue and expenses by line item. The result is how much profit (or loss) your business generated.We are in business to make money. Your P/L shows you how much money you are making. Have your P/L delivered to you at the beginning of every month. Include the last month, as well as the previous 12 months (or more depending on the age of your business). Show the numbers on your P/L as gross values as well as percentages of the whole section (common size). Also include the percentage change in the values from month to month.Ruthlessly review your P/L every month to identify opportunities to save money, make more money, increase the value of your business and spot opportunities/threats.The best place to start on your P/L is with your expenses.

Review Expenses

Examining your expenses is the easiest way to increase the overall value of your business. Every monthly expense cut will increase your business valuation 30x+. So, every $1000 you cut from your monthly expenses will increase the value of your business by more than $30,000! When combing through expenses, ask yourself the questions:“Do I absolutely need this?”“How can I negotiate this down?”“How can I restructure this to save money?”

You can secure some quick wins by cutting out software expenses that you no longer use or need. Another easy way to lower your costs is to ask your service or software provider if you can get a lower rate if you pay in bulk as opposed to each month. Start with your biggest expenses and work your way down from there.If you have a long track record and good relationship with your biggest vendors, it is likely you have some room to negotiate better rates.Look at your COGS, service providers and software and think about how you can save on those expenses.After you’ve combed through your expenses, review your revenue.

Review Your Revenue

Again, it’s best to focus first on your biggest drivers of revenue. Maybe this is your largest clients/customers or sales channels.

Ask yourself:

Again, it’s best to focus first on your biggest drivers of revenue. Maybe this is your largest clients/customers or sales channels.

Ask yourself:

If you are running an eCommerce business, it is important to review SKU level analysis such as Profit Per SKU, Ad Revenue Per SKU and Ad Spend per SKU.It is unbelievable the quick wins you can find in your business if you simply dedicate time to actually review your numbers.For example, you may notice that some of your SKUs are actually not profitable or barely profitable. If that is the case, cut them! It is better to run a lean and highly profitable business than a bloated cash eating one.

You also may notice that certain SKUs generate a much higher return than others. Can you increase the advertising for those SKUs to generate more revenue and profit?Or, maybe a certain SKU is taking up a big portion of your Ad Spend and generating a small portion of your Revenue. That is a good candidate to optimize your advertising campaign to see big results.With the wealth of business insight that comes from having a complete and correct P/L including SKU level analysis and reviewing monthly to identify opportunities, it is shocking how many businesses neglect this opportunity.If you believe in your business and want to maximize its value, set aside time to review your P/L.If you currently don’t have this level of insight/analysis from your numbers, shoot us a message and we can happily get you sorted so you’ll be able to take advantage of the insight your numbers provide.

Trend Spotting

After you examine your expenses and revenue closely, it’s time to zoom out a bit and check for trends. Look at your month-over-month, quarter-over-quarter, and year over-year trends for both your expenses and revenue. Reviewing your trends will give you insight into both threats and opportunities in your business.For example, if you notice your Ad Spend has been creeping up each month, but your Ad Revenue remains flat, this could be a cause for concern. While the numbers will not give you the reasons behind them, they will alert you to things you should dive into further. In this case, your Ad Spend. Review your ads and consider changing vendors if their results are lacking.Maybe you notice that your operating expenses are staying constant while your revenue is increasing. This is a good thing. Your business is running more profitably.


But maybe your team is struggling and needs more help and support. This could be an indication that you should be spending more on your operations to give your team a break and lead your business to longer term success.Another trend worth noting is the costs of your supply chain. If your storage fees continue to trend upward, that could mean it is time to investigate other more cost efficient options. Or, to renegotiate your rates.That’s everything you need from your P/L Statement. The next item to review for your monthly CEO Report is your Balance Sheet.

Balance Sheet

Your Balance Sheet shows your assets (cash, accounts receivable, value of ownership in investments, etc) and liabilities (accounts payable, debts, etc). The balance between your assets and liabilities is your Owner Equity.The more Owner Equity you have, the better. Higher Owner Equity means a higher balance of your assets vs liabilities.

Look at your Balance Sheet and ask yourself what you can do to increase your assets and decrease your liabilities. For example, how can you renegotiate or restructure your biggest liabilities? If you have too much cash, what assets can you invest in?These will increase the value of your business but they are easy to overlook. If you don’t spend time reviewing, you will miss these opportunities. Last up for your CEO Report is your Cashflow Statement.

Cashflow Statement

Your Cashflow Statement is a report of your cash in and cash out for the month. It begins with your starting cash balance, adds the cash you received, and subtracts the cash you spent.The result is your final cash balance for the month.Cash is king and is the lifeblood of your business.Thus, it is essential to keep a close eye on your cashflow.When reviewing your Cashflow Statement, ask yourself, how can you increase your receivables? How can you decrease your payables?By converting more of your Accounts Receivables to cash and by delaying your accounts payables, you can greatly improve your cashflow.While this will not increase the value of your business, it will allow you to make better use of your cash and rely less on loans or financing.

Between reviewing your P/L Statement, your Balance Sheet, and your Cashflow Statement, you could discover small changes that could be 10x, 20x, or 30x your business. This valuable insight is only available to you if you review your numbers each month. So take the time to review! It’s the most important hour of your month as CEO. Why: numbers tell the unfiltered story of your business. You can’t hide from your numbers!! So many ppl that are struggling are afraid to review their numbers. Don’t. More insight/clarity on the truth or your biz will give you the best chance of success. Like Ray Dalio said, you have nothing to fear from truth. On the positive side, you can spot opportunities to decrease costs, increase rev, important trends

How: Your most important hour as CEO

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