1. Do I know my sales, costs and profit for last month?
A strong answer: I can state them, from records.
A warning sign: I can only estimate.
Create a Business Brief
How to Establish Financial Reporting and Performance Monitoring
A new business needs to know, every month, whether it is making money, how much cash it has and whether its plan is holding. A few simple reports do this.
1. The business problem
How will I know, month to month, whether the business is working?
Many founders learn how the business is doing only when the bank balance is low or when taxes are due. By then the problem has been building for months.
A small monthly set of reports, produced from records kept from day one, replaces surprise with early warning.
2. What the evidence can reveal
A first set of reports includes:
- Calculated Profit and loss: sales, direct costs and overhead, month by month.
- Calculated Cash: money in and out, and the balance.
- Calculated A few measures from the plan: sales against break-even, price, cost per sale.
- Calculated Actual against plan, so differences are visible.
- Information gap Accurate, complete records, which every report depends on.
The plan from earlier in this series gives the benchmarks: break-even volume, expected sales and the cash path.
3. Investigate the problem
Illustrative An invented monthly dashboard for a small business with a plan to break even at 374 sales a month. In month 3, the plan says about 262 sales and a loss of about $3,500. The actual is 240 sales, a loss of about $4,200, and cash $700 below the plan. A one-page comparison shows that sales are about 9% under plan and cash is falling slightly faster.
Illustrative That is not alarming, but it is useful. The founder can ask why sales are low, and whether the first four months will turn out slower than planned, and check what the conservative case predicts. A business without the comparison finds out in month 6, when the gap has grown much larger.
Information gap The quality of reports depends on the records. Hypothesis The most common failures are mixing personal and business money, recording costs late or not at all, and not comparing actual with plan. A bookkeeper or accountant can help set up the structure; the founder should still read the one-page summary monthly.
4. Work through it yourself
Reporting self-assessment
An interactive APIS tool for this topic is planned. Until it is built, this worksheet applies the same method: answer each question honestly about your own business and note what you cannot yet answer.
Answer about the last three months of your business.
Strong answers mean you will notice problems early. Warning signs mean you may be flying blind. Separate your money, record every transaction promptly, and build a one-page monthly comparison of actual against plan.
5. Evaluate possible solutions
Good reporting starts small and grows with the business.
6. What leadership should do next
Questions to answer
- What were last month’s sales, costs and profit?
- What is my cash trend?
- How do I compare with plan?
- Who checks the records?
Data to gather
- Bank and card statements
- Sales and cost records
- The plan
- Previous reports
Steps to take
- Separate accounts.
- Record weekly.
- Report monthly.
- Review the gaps.
7. Engage Two Pillars
Turn Your Business Idea Into a Structured Plan
Two Pillars can help founders evaluate business concepts, research markets, build financial models, plan operations and coordinate the professional guidance a new business needs. A good first step is a one-page monthly reporting pack that compares actual results with your plan.
Sources and data notes
- Every example, company and number in this article is an invented illustration. None of it is real data, a benchmark, or a forecast.
- Reviewed October 2026. This article describes an approach to investigation. It does not replace review by qualified professionals, and it is not legal, tax or financial advice.