You’re making money. Clients are paying. The P&L looks decent. So why does it feel like you’re working harder than ever with not much to show for it?
That’s where owner’s equity comes in.
It’s not just an accountant’s column. It’s the number that tells you whether your business is building value or just paying bills. And if you’re not tracking it, you’re missing the part that actually matters.
What Owner’s Equity Actually Tells You
In plain English? It’s what your business owes you.
Owner’s equity is the difference between what the business owns (assets) and what it owes (liabilities). Whatever’s left is your stake in the business – your “what’s mine” number.
It includes:
- What you put in
- Profits you’ve left in
- Losses or draws you’ve taken out
The number moves for a reason. You should know why.
Why It’s More Than Just a Line on a Balance Sheet
This number tells you:
- Whether your business is actually growing
- How much value you’re creating for yourself
- If you’re building something or just staying busy
Profit shows you monthly wins. Equity shows you the long-term score.
Where It Hides in Your Financials
It lives on your balance sheet. Usually under:
- Owner’s equity
- Member equity (LLCs)
- Retained earnings
- Owner’s draw (subtracted from equity)
If you’re not seeing it clearly, your reports may be wrong, or someone’s not showing you what matters.
Why You Should Start Tracking It Now
Watching equity over time helps you:
- Catch issues before they wreck your finances
- Make smarter decisions about reinvesting
- Know when to take more (or less) out
- Understand what the business is actually worth to you
It’s a simple number with big implications, especially if you’re planning to grow, bring on partners, or sell someday.
Your Owner’s Equity Doesn’t Lie
You can fake a good month on a P&L. But your equity tells the truth… about what’s being built, what’s being lost, and what’s actually yours.
If you’re not sure what your equity number is saying, now is the time to find out.
Let’s take a look together and make sure you’re building more than just sales.
