How Often Should You Look at Your Numbers?

Written By Jennifer Crabtree

Your financial health as a business owner hinges on regular and thorough review of your financials. Here's a breakdown of the key points to keep in mind:

1. Review Financials Daily:

  • POS Software: Your POS system offers a real-time snapshot of your financials. It’s essential to ensure that the data in your POS software matches with QuickBooks. By doing so, you can keep track of your sales, costs, and profit margins on a daily basis.

  • Cost of Labor: Regularly update the Cost of Labor in your POS to reflect accurate figures. Calculate this by averaging your labor costs over the past four months and adjusting your POS accordingly. This ensures your Gross Profit is accurate and reliable.

2. Weekly Analysis:

  • Gross Profit: Your Gross Profit is crucial as it directly influences your ability to cover expenses and generate profit. Set specific targets for Gross Profit Percentage and monitor them weekly. If you’re not meeting these targets, identify and address the causes.

  • Effective Labor Rate: Compare your effective labor rate (actual rate after discounts or inefficiencies) with your street rate (the rate you charge customers). If there’s a gap, investigate and correct the underlying issues to optimize your profitability.

3. Monthly Financial Review:

  • P&L Statement: Review your Profit and Loss statement monthly, comparing it to your goals. This helps in verifying if you are maintaining the desired margins and controlling expenses effectively.

  • Consistency in Percentages: Track your percentages, even if your sales fluctuate. Consistency in percentages ensures that your business remains on a stable financial footing.

4. Annual Comparison:

  • Year-Over-Year Analysis: By comparing your current financial data to the same month in the previous year, you gain insight into trends and the overall direction of your business.

5. Seek Professional Guidance:

  • If the numbers feel overwhelming or difficult to interpret, consider working with a financial consultant such as JPC Accounting. I can help you understand your financials better and use them to make informed business decisions.

By following these practices, you'll gain a deeper understanding of your business's financial health, allowing you to make proactive decisions, maintain consistent margins, and scale your business effectively.

Jennifer Crabtree