Why Successful Business Owners Keep an Eye on These 5 Numbers Every Month
Keeping track of your finances doesn’t mean you need to spend hours buried in spreadsheets.
For most small business owners, there are a handful of important numbers that can tell you a lot about how your business is performing.
You might know your customers inside and out, understand your industry and have a good idea of how busy the next few weeks will be. But do you know how much profit your business made last month? How much money your customers still owe you? Or where most of your business spending is going?
This is where a simple monthly financial check-in can be incredibly useful.
Taking 20–30 minutes each month to review a few key figures can give you a clearer picture of your financial position, highlight trends and help you spot potential issues before they become bigger problems.
Here are five business numbers worth keeping an eye on.
Business Number #1: Revenue – How Much Are You Bringing In?
Revenue, also known as sales or turnover, is the total income your business generates before expenses are deducted.
It’s one of the most obvious figures to monitor, but revenue on its own doesn’t tell you the whole story.
What matters is understanding how your revenue is changing over time.
Ask yourself:
Is revenue growing or declining?
Which months tend to be the strongest?
Are there seasonal patterns?
Which products or services are generating the most income?
Has an increase in workload actually resulted in higher sales?
Comparing your current revenue with previous months, as well as the same period last year, can help reveal useful trends.
It’s also important to remember that higher revenue doesn’t automatically mean higher profit.
You could have your biggest sales month ever and still find that very little money is left after your expenses have been paid.
If you’ve ever been extremely busy but wondered where all the money went, our article “I’m Flat Out… So Why Isn’t There Any Money Left?” explores six common reasons a busy business may not be producing the financial results you expected.
Business Number #2: Profit – How Much Are You Really Making?
Revenue shows you how much money your business has generated.
Profit shows you what remains after your business expenses have been taken into account.
This is one of the most important figures to understand because an increase in sales doesn’t necessarily mean your business is becoming more profitable.
For example, imagine your monthly sales increase from $50,000 to $60,000.
At first glance, that sounds like great news.
But if your expenses have also increased from $35,000 to $48,000, the extra $10,000 in sales has only produced an additional $2,000 in profit.
You’ve potentially taken on more work, more costs and more pressure without seeing the same level of financial benefit.
Reviewing your Profit and Loss report regularly can help you see whether your profitability is improving, staying consistent or declining.
It can also highlight expenses that are creeping up over time and putting pressure on your profit margins.
Business Number #3: Cash Flow – Do You Have Enough Money Available?
Profit and cash flow are closely connected, but they are not the same thing.
A business can be profitable and still experience cash flow problems.
For example, you may have completed a job and sent an invoice to your customer. The income may be recorded in your accounting records, but if the customer hasn’t paid yet, that money isn’t available in your bank account.
At the same time, you may still need to pay wages, suppliers, rent and other business expenses.
That’s why keeping an eye on cash flow is so important.
Consider:
How much money is coming into the business?
How much is going out?
Are there particular times when cash flow becomes tight?
Are any large expenses or payments coming up?
Will you have enough cash available to meet your upcoming commitments?
Understanding your cash flow allows you to plan ahead rather than being caught off guard when bills or other payments fall due.
If managing money coming in and going out is a challenge, our guide “Cash Flow Management: 10 Smart Tips for Small Business Success” provides practical ideas to help you develop stronger cash flow habits.
Business Number #4: Accounts Receivable – How Much Money Is Still Owed to You?
Accounts receivable is another figure that can easily be overlooked.
You may have had an excellent month for sales, but how much of that money has actually been collected?
Your Accounts Receivable report shows the invoices your customers have received but have not yet paid.
When reviewing this figure, look closely at:
Your total outstanding invoices
Recently overdue invoices
Invoices that are more than 30 days overdue
Customers who regularly pay late
Unpaid invoices are more than just an administrative issue.
They can have a direct impact on your cash flow and your ability to pay wages, suppliers and other business expenses.
Having a consistent invoicing and follow-up process can help you get paid sooner and maintain healthier cash flow.
The earlier you identify overdue accounts, the sooner you can follow them up.
Business Number #5: Expenses – Where Is Your Money Being Spent?
It’s natural to focus on how much money your business is making.
But understanding where that money is going is just as important.
Business expenses can gradually increase without being immediately obvious. Small increases across several categories can eventually have a significant impact on your bottom line.
Your expenses might include:
Software subscriptions
Insurance
Fuel
Wages
Merchant fees
Equipment
Advertising
Rent
Phone and internet
Supplier costs
Review your expenses each month and compare them with previous periods.
Ask yourself:
Are any expenses increasing significantly?
Are you still using all the subscriptions and services you’re paying for?
Have supplier costs increased?
If your costs have increased, have you reviewed your pricing to make sure your margins are still healthy?
The aim isn’t to cut every expense possible.
Instead, you want to understand where your money is going and whether those costs are providing value to your business.
Why These Numbers Can Tell You More Than Your Bank Balance
There’s one number most business owners probably check more often than all five of these combined:
The bank balance.
Your bank balance is certainly useful, but it shouldn’t be the only measure you use to judge the financial health of your business.
For example, seeing $40,000 sitting in your bank account doesn’t necessarily mean you have $40,000 available to spend.
Some of that money may already be needed for wages, supplier payments, BAS, GST, PAYG, superannuation, loan repayments or other upcoming commitments.
On the other hand, having a lower bank balance doesn’t automatically mean your business isn’t profitable.
Your bank balance simply shows how much cash is in the account at a particular point in time.
For a more detailed look at this, our article “What Does Your Bank Balance Actually Tell You?” explains why relying solely on your banking app may not give you the complete financial picture.
Where Can You Find These Numbers?
You shouldn’t have to calculate all of this information manually every month.
If your bookkeeping is up to date, much of the information you need should be available through your accounting software and financial reports.
Depending on your business and the software you use, useful reports may include:
Profit and Loss
Balance Sheet
Accounts Receivable
Accounts Payable
Cash flow information
Your bookkeeper can also help make sure your records are accurate and show you which reports are most useful for monitoring your business.
For information about the financial records Australian businesses are required to keep, you can also refer to the Australian Taxation Office (ATO).
Create a Simple Monthly Financial Check-In
You don’t need to spend hours analysing your accounts every week.
Instead, set aside around 20–30 minutes once a month to review these five key numbers:
Revenue – How much did we bring in?
Profit – How much did we keep after expenses?
Cash flow – Do we have enough money available for upcoming commitments?
Accounts Receivable – How much money are customers still owing us?
Expenses – Where is the business spending its money?
Then compare your results with previous months and, where useful, the same period last year.
Over time, you’ll develop a better understanding of what normal looks like for your business.
That makes it much easier to notice when something changes.
Don’t Just Look at the Numbers – Use Them
Financial reports are only valuable if they help you make better business decisions.
Perhaps you discover that your expenses have been steadily increasing.
Maybe customers are taking longer to pay.
You might notice that sales are growing, but your profit isn’t keeping pace.
Or you may discover that your business is performing better than you thought.
Whatever the numbers tell you, the important thing is that you have greater visibility over what’s happening in your business.
Instead of relying on guesswork, you can use your financial information to make more informed decisions and have more productive conversations with your bookkeeper, accountant, financial adviser or other appropriately qualified professionals when specific advice is required.
The Bottom Line
You don’t need to become a financial expert or spend your evenings analysing spreadsheets to have a better understanding of your business finances.
Start with five numbers:
Revenue. Profit. Cash flow. Accounts receivable. Expenses.
Reviewing these figures each month can help you look beyond the day-to-day busyness of running your business and understand what is really happening financially.
The better you understand your numbers, the better positioned you are to make informed decisions, plan ahead and keep your business moving in the right direction.
Comments