5 Financial Metrics Every Small Business Owner Should Track Monthly

You don’t need a 40-page financial report to run your business well. You need a handful of numbers, checked every month, that tell you whether things are on track.

These are the five I’d start with.

1. Revenue (compared to the same month last year)

Revenue is the obvious one. But looking at it alone doesn’t tell you much. Compare it to the same month last year, so seasonality doesn’t fool you.

Ask: Are we growing? If not, is it fewer customers, smaller sales, or fewer repeat buyers?

2. Gross margin

Gross margin is what’s left after the direct costs of delivering your product or service. Materials, direct labor, subcontractors.

The formula: (revenue − cost of goods sold) ÷ revenue

If gross margin is shrinking, your prices aren’t keeping up with your costs. That’s often the first place profit leaks, and it’s easy to miss when revenue is growing.

Ask: Is our margin holding steady month to month? Which jobs or products have the best and worst margins?

3. Net profit

This is what’s left after everything: direct costs, overhead, rent, software, salaries. It’s the “did we actually make money?” number.

Ask: Is overhead growing faster than revenue? Are there expenses we’ve stopped questioning?

4. Cash runway

Runway is how long you could keep operating if no new cash came in. Take your cash on hand and divide it by your average monthly expenses.

If you have $60,000 in the bank and spend $20,000 a month, you have 3 months of runway.

Ask: Do we have enough cushion? Most small businesses sleep better with at least 2 to 3 months.

5. AR aging

AR aging shows who owes you money and how long they’ve owed it: current, 30 days, 60 days, 90+ days.

The older an invoice gets, the less likely you are to collect it. A growing 60+ day column is a warning sign, even if sales look great.

Ask: Who needs a follow-up call this week?

How to review all five in under an hour

Pick the same day each month, after your books are closed. Then:

• 10 minutes: Pull your P&L (this month vs. same month last year), balance sheet, and AR aging report.

• 15 minutes: Note revenue, gross margin, and net profit. Compare to last year.

• 10 minutes: Calculate runway from your bank balance and average expenses.

• 10 minutes: Scan AR aging and list anyone to follow up with.

• 15 minutes: Write down one thing that surprised you and one action for next month.

That last step is the one that makes it worth doing.

Keep it simple

A one-page sheet with these five numbers, month over month, will tell you more than most financial reports. The trends matter more than any single month.

If you’d like help setting up your monthly review, or figuring out what your numbers are really saying, book 30 minutes with me.

— Kari