Last month was busy. You barely sat down, stock moved, the phone did not stop. Then on the 2nd you looked at the account, and there was less in it than the month before. Nobody stole anything. Nothing went wrong that you can point at. The month just quietly failed to pay you, and you have no way of proving where it went.
That is not a small annoyance. It is the reason businesses that are busy for three years still cannot survive a slow quarter, cannot get a loan, and cannot be sold. Not because they are unprofitable (plenty of them are fine) but because the owner cannot tell the difference between a good month and a bad one until it is far too late to do anything.
By the end of this guide you will be able to sit down on the first weekend of any month, spend twenty minutes, and finish with one page that says exactly what the previous month earned. You will also know your breakeven, the point in the month where you stop working for the landlord and start working for yourself.
Everything here works with a phone, a notebook, and whatever statement your bank or your mobile money account already sends you. No accounting software, no accountant, no course.
(This is written for any country. Where you see money I write plain numbers, read them in your own currency, whether that is shillings, naira, rupees, pesos, pounds or dollars. The percentages and ratios are the part that transfers exactly.)
Your balance is not your profit, and it never was
Three different numbers get confused with each other constantly. They are not the same and the gap between them is where the confusion lives.
- Cash in your account is what is sitting there today. It includes money that is not yours: deposits for orders not delivered, sales tax you will hand over, a loan you must repay.
- Revenue is everything customers paid you in the month. It says nothing about what it cost you to serve them.
- Profit is what is left after everything the month actually consumed, including things you paid for in a different month.
Four things reliably hide in the gap. Learn to see them, because every one of them makes a bad month look fine or a good month look terrible.
Stock is not an expense until it sells. You spent a large sum on stock on the 3rd. Your account dropped. But most of that is still on the shelf. It is your money in a different shape. Counting it as a cost of the month makes a normal month look like a disaster.
Credit you gave out is revenue you have not got. The goods left, the sale is real, the cash is not there. If you count only what hit your account you will understate a month and then be baffled when the money arrives later and makes a bad month look great.
Money you took out is not an expense. When you take money for your own use, that is not a cost of doing business, it is you paying yourself. Mixed into the expenses, it makes the business look unprofitable when it is actually paying you fine, or hides the fact that you are underpaying yourself and calling it a profit.
Costs that arrive once a year still belong to every month. Insurance, licences, an annual subscription, the equipment you bought outright. Charging the whole thing to one month makes that month look like a catastrophe and the other eleven look better than they are.
Before you can count, separate
You cannot do this on an account that also buys your family's groceries. Two things have to happen first, and they take an afternoon.
One, business money lives in its own account. A separate bank account, a separate mobile money wallet, a business till or merchant account. Whatever exists where you are. It does not need to be a fancy business account with fees. It needs to be a different account with nothing personal in it.
Two, you pay yourself a fixed amount on a fixed date. Pick a number you can actually live on and take it once or twice a month, as one transfer, on the same date. Not a hundred here and a few thousand there when you need it.
That second one is the single change that makes everything else legible, and most owners resist it. Do it anyway. Once your own pay is one predictable line, the business stops being a bag you reach into and starts being something with a result you can read.
If you cannot pay yourself a fixed amount because the money is not reliably there, that is not a reason to skip this. That is the most important finding you could possibly have, and the page you are about to build will tell you why.
Now gather what you need. Do not start calculating yet, just get these five things in front of you for one complete past month. Pick a month that has already finished, ideally the one just gone.
- Total sales. Everything customers owed you for what you sold that month, paid or not.
- Purchases of stock or materials. What you bought to sell or to make things with.
- Stock on hand at the start and at the end of the month, counted, in money, at what you paid for it.
- Fixed costs. Rent, wages, your own pay, connectivity, insurance, licences.
- Everything else you spent, transport, fees, packaging, power, repairs, small tools.
The rest of this guide is paid
You have read the first 21 sections. The remaining 45 cover the steps, the templates and the mistakes that cost people a week. Buy it once and it stays in your account for good.
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