Behind the Numbers: What Your Balance Sheet Reveals

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.

However, if your equity is shrinking or staying flat over time, it might mean your costs are too high or your sales are too low. Paying close attention to this area of your business will help you make better decisions on where to cut back on your expenses or where to invest.

Watch the Trends Over Time
One month’s balance sheet is helpful. But looking at your balance sheets over several months or years is even more valuable. You’ll start to see patterns in your spending, borrowing, and saving. Are you building cash reserves? Are your truck loans getting paid off? Is your inventory growing too fast?

These trends will help you make smarter decisions for the future, as they provide you with an overview of your entire financial situation. They give you the full picture instead of having you rely on guesswork or estimations – a vague practice that can actually hurt you more than help. When it’s time to grow, invest, or cut back, those numbers will help guide you.

Solid Money Management Adds Up
You might be busy with customer calls and delivery schedules, but taking the extra time to study and fully understand your balance sheet can go a long way in protecting your business from unexpected financial trouble. It also helps you set clear goals and communicate with banks or business partners with confidence. When you use your balance sheet as a well-read resource – not just a once-a-year chore – you’ll detect new ways to improve your business. You’ll feel more sure about your choices and demonstrate to others that your company is built on more than just grit; it’s built on solid ground.