The 7 key numbers every owner-managed business should check monthly

"I don't really understand my numbers, or what they're telling me."

If that sounds familiar, you're in good company. Most owners aren't short of numbers. They have a bank app, an accounting system full of reports, and a set of year-end accounts that arrives months after the year has finished. What they're short of is the handful of numbers that actually tell them how the business is doing.

You don't need a 40-page management pack; believe me, I have created many and they are hardly looked at! You need seven numbers, checked every month, and compared with last month, last year and businesses like yours.

Here they are, what each one tells you, and how to work it out.

The example we'll use

To keep it practical, we'll follow one fictional business through all seven:

• Turnover this year: £850,000 (last year £750,000)
• Gross profit: £340,000
• Overheads (excluding depreciation and interest): £255,000
• Employees: 8
• Owner's fair market salary for the role they do: £50,000
• Tax currently owed (VAT, PAYE, corporation tax): £38,000
• Cash in the bank: £55,000

1. Revenue growth

What it tells you: whether the business is getting bigger, and how fast.

How to work it out: Revenue growth = (this period's sales − same period last year) ÷ same period last year

Example: (£850,000 − £750,000) ÷ £750,000 = 13.3%

Why it matters: growth is good, but it isn't free. As we explain in why profitable businesses still run out of cash, faster growth usually needs more cash. Always compare growth with your cash days and core cash target (numbers 6 and 7) rather than celebrating it on its own.

Watch for: growth that comes entirely from price rises, or from one large customer you'd struggle to replace.

2. Gross profit

What it tells you: how much of every pound of sales is left after the direct cost of making the sale: materials, stock, subcontractors and direct labour.

How to work it out: Gross margin = gross profit ÷ sales

Example: £340,000 ÷ £850,000 = 40%. For every £1 of sales, 40p is left to pay overheads and make a profit.

Why it matters: gross margin is often the most powerful number in the business. A small improvement in margin, applied to every sale, usually does more for profit than a big push for new customers.

Watch for: margin slipping as sales grow. It often means discounting to win work, supplier prices rising without your own prices following, or waste creeping in. In hospitality, track food and drink margins separately; a combined figure hides a lot.

3. Operating profit (EBITDA)

What it tells you: what the business earns from its day-to-day trading, before interest, tax, depreciation and amortisation.

How to work it out: EBITDA = gross profit − overheads (excluding depreciation and interest)

Example: £340,000 − £255,000 = £85,000, which is 10% of sales.

Why it matters: EBITDA is the number lenders and buyers look at first, because it shows the earning power of the business before decisions about financing and accounting policy. In essence, it levels the playing field, as it were, for businesses in your sector. It's also the starting point for numbers 5 and 7.

Watch for: overheads growing faster than gross profit. That's the point where growth stops adding to the bottom line.

4. Revenue per employee

What it tells you: how productive and efficient the business is with its current level of staff, and whether you're getting more out of your team over time.

How to work it out: Revenue per employee = sales ÷ number of full-time-equivalent staff

Example: £850,000 ÷ 8 = £106,250

Why it matters: people are usually the largest overhead. If revenue per employee is falling, you're adding cost faster than output. If it's rising, your systems, processes or pricing are improving. It's also a good number to compare against similar businesses, because it adjusts for size.

Watch for: a fall straight after hiring, which is normal, that doesn't recover within a few months.

5. Business return

What it tells you: whether the business is a good investment of your money and your time, compared with what it could earn elsewhere.

How to work it out: Business return = (EBITDA − a fair market salary for the owner's role) ÷ deemed business value

For a quick, simple deemed value, we use 2.5 × EBITDA. That is a rule of thumb for tracking the trend, not a valuation. A proper valuation depends on your sector, your risks and how dependent the business is on you.

Example:

• Deemed value: 2.5 × £85,000 = £212,500
• Business return: (£85,000 − £50,000) ÷ £212,500 = 16.5%

Why it matters: many owners are really earning a salary for a demanding job, with very little left over as a return on the business itself. Taking out what you'd have to pay someone else to do your role shows what the business genuinely earns as an asset. That is what a buyer would pay for.

Watch for: a return that is low or falling while you're working longer hours. It's often the clearest sign that the business needs to change how it works, not just work harder.

6. Cash days

What it tells you: how long your money is tied up in the business before it comes back to you.

How to work it out: Cash days = debtor days + stock days − creditor days

• Debtor days = money owed by customers ÷ annual sales × 365
• Stock days = stock value ÷ annual cost of sales × 365
• Creditor days = money owed to suppliers ÷ annual cost of sales × 365

Example: customers take 40 days to pay, stock is held for 20 days, and suppliers are paid in 30 days. Cash days = 40 + 20 − 30 = 30 days.

Why it matters: every day of cash days is a day of costs you're funding out of your own pocket. Cutting it, by invoicing promptly, chasing debts or holding less stock, releases cash without needing a single extra sale.

Watch for: cash days creeping up as you grow. Bigger customers often expect longer payment terms.

7. Core cash target

What it tells you: whether you have enough cash to be safe, rather than just enough to get through the week.

How to work it out: Core cash target = all tax currently owed + two months of overheads

Example:

• Tax owed: £38,000
• Two months of overheads: £255,000 ÷ 12 × 2 = £42,500
• Core cash target: £80,500
• Cash in the bank: £55,000, which is £25,500 short of target

Why it matters: a bank balance on its own tells you very little. Measured against a target, it tells you whether you're building resilience or relying on next month's income to pay this month's bills. Our example business is profitable and growing, but it is running below its safety margin.

Watch for: a gap to target that grows month after month, even when profit looks fine.

The monthly scorecard

Put the seven numbers on one page and look at them together every month. The trend matters more than any single figure.

Read across them, not just down. In our example, growth of 13% and a 40% margin look healthy, but 30 cash days and a £25,500 shortfall against the core cash target say the growth is being funded from a thin cash cushion. That one observation leads straight to a decision: chase debtors harder, slow a planned purchase, or arrange a facility before it's needed.

Getting started

1. Pick a regular date. Work out the seven numbers within ten working days of each month end. Old numbers lead to late decisions.
2. Start with what you have. Your accounting software holds almost everything you need. If the bookkeeping isn't up to date, that is the first job.
3. Compare, don't just record. Each number becomes useful when you compare it with last month, last year and businesses like yours.
4. Agree one action a month. The numbers are only worth tracking if they change what you do.

Want us to do the first one with you?

Our Clarity diagnostic starts with exactly these seven numbers: worked out from your own records, explained in plain English, and benchmarked against businesses like yours. Over six weeks we also look at your cash and the five levers that move profit, and you leave with a written action plan, whether or not you go any further with us.