Running a propane business takes more than keeping tanks filled and trucks on the road. Behind the scenes, your financial records tell the full story of how strong your company really is. And, one of the best tools you have is your balance sheet.
A balance sheet isn’t just something for the accountant to review at tax time. It’s a snapshot of what you own, what you owe, and what’s left over after the bills have all been paid. It gives a clear picture of your financial health and helps you identify issues before they become real problems. If you’ve ever felt unsure about where your business truly stands, fiscally speaking, your balance sheet can give you answers — if you know how to read it.
Know What You Own
Start by looking at your assets. These are things your business owns that have real value. They include your tanks, trucks, equipment, property, money in the bank, and accounts receivable. Your balance sheet lists them so you can clearly see how much you have in working tools and resources.
Strong assets do much to assist you in obtaining loans, building out your company, and staying ready for growth. If your assets are failing or getting old without being replaced, that could be a sign that it’s time to reinvest in your operations.
Know What You Owe
Next, look at your liabilities. These are your debts and unpaid bills. They could include things such as a bank loan, lines of credit, or vendor payments that haven’t been cleared. Keeping these under control is important.
If your debts are growing faster than your assets, you could be headed for trouble. The goal isn’t necessarily to avoid debt altogether — it’s to make sure your debt is helping you grow, not pulling you down. A good balance sheet shows how well you’re managing your debts and whether or not you have a solid repayment plan in place. You should own them and not let them own you.
Check the Owner’s Equity
This is the part that shows how much of the business you actually own. It’s the difference between what you own (your assets) and what you owe (your liabilities). If your equity is growing, that’s a good sign. It means your business is gaining value.