3 Simple Numbers That Show If Your Business is Making Money
Ever have that moment when you look at your business bank account and think "I was busier than ever last month... so where's all the money?" If you're nodding your head, you're about to discover why being busy doesn't always mean being profitable.
Remember that moment you decided to check your business finances and suddenly felt like you were staring at a foreign language? You're not alone. While your accountant might love spreadsheets full of numbers, most business owners would rather focus on serving their customers.
Here's the good news: You don't need a finance degree to understand if your business is healthy. Let's break it down to the three numbers that actually matter.
The Money You Actually Get to Keep
(AKA Revenue vs. Profit)
Picture this: Your business made $10,000 last month. Time to celebrate, right? Well, not so fast. That's your revenue – and revenue is like ordering a fancy coffee. The price on the menu looks great until you remember you have to pay for the beans, the barista, and that expensive espresso machine.
Pro Tip: To find your actual profit, take your total sales (revenue) and subtract everything you spent to make those sales happen. That's the money you actually get to keep.
Where to find it: Your profit and loss statement (P&L) When to check it: Monthly
Take Action This Week:
▢ Write down this month's total payments received
▢ Write down this month's total bills paid
▢ Subtract bills from payments
That's your basic profit picture. We'll make it more accurate over time, but this is your starting point.
The "Can I Pay My Bills?" Number
(AKA Cash Flow)
Ever had a fantastic month of sales but still felt nervous about paying your bills? That's because profit and cash flow are different beasts. Think of cash flow as your business's checking account balance – but with a crystal ball that shows what's coming in and going out over the next few weeks.
Reality Check: A profitable business can still run out of cash if the timing of payments is off.
Where to find it: Your bank balance + upcoming income - upcoming bills When to check it: Weekly (yes, really)
Take Action This Week:
▢ Write down your current bank balance
▢ List all bills due in the next two weeks
▢ List all payments you expect in the next two weeks
▢ Do the math: Balance + Expected Payments - Bills = Your Cash Picture
Money Playing Hide and Seek
(AKA Money People Owe You)
If you've ever found yourself thinking "Business is great, but why am I still waiting on payments from last month?" – this one's for you. This is the money that's technically yours but is still hanging out in your customers' bank accounts.
Bottom Line: A sale isn't really a sale until the money is in your account.
Where to find it: Your accounts receivable aging report When to check it: Weekly
Take Action This Week:
▢ List anyone who owes you money
▢ Note how long each payment is overdue
▢ Send friendly reminders to anyone over 30 days
▢ Consider offering early payment discounts
When to Pay Extra Attention
Some moments require you to be extra friendly with your numbers:
- Before making a big purchase (Will your cash flow support it?)
- When considering hiring someone new (Can your profit sustain another salary?)
- If your business is seasonal (How's your cash cushion looking?)
- Before signing a new lease or contract (What do your trends show?)
- When taking on a large project (Do you have the cash to support it until payment?)
Making These Numbers Work For You
You don't need complicated systems or hours of number-crunching. Start with these three simple checks:
- Monthly: Check your actual profit
- Weekly: Preview your cash flow
- Weekly: Review who owes you money
The secret isn't in making it complicated – it's in making it consistent.
Pro Tip: Put a recurring 15-minute appointment on your calendar called "Money Date." Use this time to check these three numbers. No spreadsheets required, just basic math and maybe your favorite beverage.
Remember: Even Amazon started with Jeff Bezos checking simple numbers in his garage. Your multi-million dollar business starts with understanding these three basic numbers. The best part? You can start right now, with the information you already have.
Ready to make these numbers work for your business? Let's turn your daily transactions into valuable insights that actually make sense.
📞 Call: (214) 306-7850 📧 Email: hello@mybizbookkeeper.com
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