Essential Excel Formulas Every Business Owner Should Know

Most business owners use about 5% of what Excel can do. They know SUM, maybe AVERAGE, and they’ve heard of VLOOKUP but aren’t sure how it works. Meanwhile, they’re spending hours on manual tasks that the right formula could handle in seconds.

This isn’t a comprehensive Excel course. It’s the short list of formulas and features that genuinely matter for running a business — the ones that save real time on real tasks. Learn these, and you’ll get dramatically more out of the tool you’re already paying for.

VLOOKUP: Pull Data From One Table Into Another

This is the formula most business owners have heard of but never quite learned. It looks up a value in one table and returns a corresponding value from another column. In plain English: “Find this customer code in my pricing table and tell me their discount rate.”

The syntax:

=VLOOKUP(what_to_find, where_to_look, column_number, FALSE)

A practical example: You have a quotes sheet where you type a product code, and you want it to automatically pull the product name and price from your product list.

=VLOOKUP(A2, Products!A:C, 2, FALSE)

This says: take the value in A2, look for it in column A of the Products sheet, and return the value from column 2 (product name). The FALSE at the end means “exact match only” — use this almost every time.

Where VLOOKUP falls short: It can only look left to right. If your lookup column isn’t the leftmost column in your range, VLOOKUP can’t handle it. It also breaks if you insert or delete columns in your lookup table, because it uses a column number rather than a column name. That’s where INDEX/MATCH comes in.

INDEX/MATCH: The Better VLOOKUP

INDEX/MATCH does everything VLOOKUP does, but without the limitations. It’s two functions working together: MATCH finds the row position, and INDEX returns the value from that position in a different column.

The syntax:

=INDEX(column_to_return, MATCH(what_to_find, column_to_search, 0))

The same example as above:

=INDEX(Products!B:B, MATCH(A2, Products!A:A, 0))

This says: find A2’s value in column A of the Products sheet, then return the corresponding value from column B. The 0 in MATCH means exact match.

Why it’s better:

• It can look in any direction — the search column doesn’t need to be to the left of the return column
• It uses column references, not column numbers, so it doesn’t break when you rearrange your table
• It’s faster on large datasets

The downside is readability. VLOOKUP is easier to understand at a glance. INDEX/MATCH takes a few extra seconds to parse. For critical spreadsheets that other people maintain, pick whichever one your team can understand and troubleshoot.

SUMIFS: Add Up Numbers Based on Multiple Conditions

SUM adds everything. SUMIF adds based on one condition. SUMIFS adds based on multiple conditions. This is the formula you want for questions like “What’s the total revenue from plumbing jobs in January?”

The syntax:

=SUMIFS(sum_range, criteria_range1, criteria1, criteria_range2, criteria2, ...)

Practical example: Total sales for a specific salesperson in a specific month.

=SUMIFS(D:D, B:B, "Sarah", C:C, ">=2026-02-01", C:C, "<2026-03-01")

This adds up all values in column D where column B is “Sarah” AND column C falls within February 2026.

Where this shines: Monthly summaries, category breakdowns, team performance reports — any situation where you need to slice and total a dataset by multiple criteria. SUMIFS handles up to 127 criteria pairs, though if you need more than three or four, you’ve probably outgrown the formula.

Related formulas worth knowing: COUNTIFS (count instead of sum), AVERAGEIFS (average instead of sum). Same syntax, different aggregation.

IF: Make Decisions in Your Spreadsheet

IF checks a condition and returns one value if true, another if false. Simple in concept, powerful in practice.

The syntax:

=IF(condition, value_if_true, value_if_false)

Practical example: Flag overdue invoices.

=IF(E2<TODAY(), "OVERDUE", "OK")

If the date in E2 has passed, show “OVERDUE.” Otherwise, show “OK.” Pair this with conditional formatting and you’ve got a visual early warning system.

Where IF gets dangerous: Nested IFs. The moment you write =IF(A1>100, "High", IF(A1>50, "Medium", IF(A1>20, "Low", "Minimal"))), you’re building logic that’s hard to read, easy to break, and nearly impossible for someone else to debug. If you need more than two levels of nesting, use IFS (available in Microsoft 365) or a lookup table with INDEX/MATCH instead.

Pivot Tables: Summarise Without Formulas

Pivot tables aren’t a formula — they’re a feature. And they’re arguably the single most valuable thing in Excel for business owners, yet most never learn them because the name sounds technical.

A pivot table takes a flat list of data and lets you summarise it by any combination of categories. No formulas needed. Just drag and drop.

What you can do:

• Total sales by customer, by month — drag “Customer” to Rows, “Month” to Columns, “Amount” to Values
• Count jobs by status and team member — drag “Status” to Rows, “Team Member” to Columns, change Values to “Count”
• Find your top products by revenue — drag “Product” to Rows, “Revenue” to Values, sort descending

The source data needs to be a clean table — one row per record, consistent column headers, no merged cells, no blank rows. If your data is messy, clean it up first. A pivot table on messy data gives messy results.

Conditional Formatting: Make Problems Visible

Not a formula, but indispensable. Conditional formatting changes cell colours based on rules — highlight overdue dates in red, flag prices above a threshold in orange, shade top performers in green.

The rules that matter most for business:

• Highlight cells greater/less than a value — instant visibility for outliers
• Colour scales — a gradient from green to red across a range, great for spotting patterns in financial data
• Date-based rules — highlight anything past due or approaching a deadline

The trick is restraint. Too many conditional formatting rules make a spreadsheet look like a traffic light factory. Pick the two or three most important signals and highlight those. Everything else is noise.

Where Formulas Hit Their Limits

These formulas are genuinely powerful. A well-built spreadsheet with VLOOKUPs, SUMIFS, pivot tables, and conditional formatting can run a small business for years. But there’s a ceiling, and it’s important to know where it is.

Formulas can’t enforce rules. A VLOOKUP can pull a price, but it can’t stop someone from overriding it with a manual entry. An IF formula can flag an error, but it can’t prevent it.

Formulas can’t trigger actions. A SUMIFS can tell you total overdue invoices, but it can’t send a reminder email. A conditional format can highlight a low stock item, but it can’t create a purchase order.

Formulas can’t connect systems. Your pricing formula can’t pull live costs from your supplier’s system. Your sales summary can’t push data into your accounting software. Every connection between systems is a manual copy-paste, which means delay and error.

Formulas don’t scale with complexity. The first VLOOKUP is easy. The fiftieth, referencing data across eight sheets with nested IFs and error handling, is a maintenance nightmare that one person understands and everyone else is afraid to touch.

Learn the formulas. Use them. They’ll save you hours every week and help you make better decisions with the data you already have. But when you find yourself spending more time maintaining the spreadsheet than using the answers it gives you, that’s the signal that your business needs something more.