InvoiceBerry Blog

Small Business | Invoicing | Marketing | Entrepreneurship | Freelancing

5 Financial Numbers Every Small Business Should Know and Track

Written by on March 28, 2016

Wouldn’t it be easier if you could predict, at least partially, the success of your business?

Well, that’s possible as long as you know and track a few essential financial numbers. If you don’t track your finances, you’ll take on too much debt, and this will obviously set you up for failure in the long term.

Try our online invoicing software for free

Send professional-looking invoices
Accept online payments with ease
Keep track of who's paid you

Start sending invoices

Small business finance

You need to monitor your cash flow, net income, profit and loss, sales and gross margin, as well as your total inventory to ensure that you won’t be facing any potential issues in the future.

Here are 5 critical numbers every small business owner should know and track.

1. Cash Flow

Cash flow is essentially the amount of money you get by subtracting operating expenses from the money your company generates during normal business activities.

Sufficient cash flow in your business checking accounts is essential, and should meet all of your business’ monthly expenses.

Small business cashflow positive or negative?

When your cash inflow exceeds your cash outflow, it means you’re operating “in black” — in essence, your return on investment is higher (and so is your profit).

Download cash flow template right here.

2. Net Income

Want to know if you’re losing money? Calculating your net income is the easiest way to find out.

To do is, simply subtracting all your expenses, including taxes, from your income. Unlike cash flow, your net income isn’t adjusted for things like depreciation.

Losing money? Calculate net income first for your small business

To know just where your business is heading to, make sure to calculate your net income every month.

3. Profit and Loss

Making realistic plans for the future, both short term and long term, is absolutely critical to the success of your company.

Profit and loss is one of the most important financial numbers for small business

Many companies set goals but due to the lack of a strategic business plan, they end up taking on more debt.

Profit and loss is a figure found on your P&L statement, and shows your company’s income (sales and revenue) minus expenses during a certain period of time (quarterly, every six months, or yearly).

If you want to predict the success of your small business, always explore your profit and loss to project earnings, and allow your company to grow gradually.

Download free profit and loss template from here!

4. Sales

Generating sales (and revenue) is every small business owner’s primary objective. Keep an eye on sales to monitor when there’s a dip and when business is good, so you can adequately react and take action.

What's your small business revenue? If you can determine why sales are up, then you can immediately implement a strategy to keep numbers on the rise, and generate more revenue.

5. Gross Margin

When we say gross margin, we refer to the amount of money that is left after subtracting the cost of the merchandise from the selling price (e.g. if you’re buying, say, a laptop for $300, and you’re selling it for $700, then your gross margin will be $400).

If your gross margin is low and doesn’t cover your business monthly expenses such as salaries, utilities and marketing, then you’re not charging enough for your products.

Small business tracking financial numbers

Always Keep Track of Your Finances

The number-one mistake that leads small businesses to failure is not keeping track of finances. Instead of spending hours going through invoices and reports, let InvoiceBerry do the job for you!

The Ultimate Social Media Tool

Download our free guide to learn how to create shareable content, generate website traffic & increase conversions.

Ready to start invoicing your clients with InvoiceBerry?

Sign up to our free trial account. No credit card required.

Sign Up Now
Read previous post:
Main tricks how to be productive working from home
19 Tips on Boosting Productivity While Working From Home

While it certainly has its perks, working from home can also be a challenge. Not only are you solely responsible...

We use cookies to give you a better experience. Check out our privacy policy for more information.