Most owners can't tell you their monthly break-even point or the profit they made last month. Five numbers give you a clear picture: new leads and what each one cost, how many turn into customers, your average sale, your gross margin, and your break-even and actual profit. Check the first three every week and the last two every month, on one simple scorecard.
Can you answer these two questions?
At a small workshop I ran, I asked the room two questions:
- What's your monthly break-even point?
- What was your actual profit last month?
Only one person out of seven knew the answer.
You wouldn't drive a car with the dashboard blacked out. But that's how many businesses run day to day: moving fast with no idea how fast they're going, or even in what direction.
The five numbers
1. New leads, and what each one cost
How many new enquiries came in this week, and where from? If you spend money on marketing, divide what you spent by the number of leads to get your cost per lead.
2. How many leads become customers
Out of every ten leads, how many buy? If that number drops, look at how quickly you respond and how well you follow up. See the 10-minute rule and how to follow up with leads.
3. Your average sale
The average value of each sale. Raising it, by offering extras or a premium option, boosts profit without needing more customers. See what it would take to double your profit.
4. Your gross margin
What's left from each sale after the direct cost of delivering it, before overheads. It tells you what extra work is really worth. See where the hidden profit sits.
5. Your break-even point and actual profit
Your break-even point is the amount you need to sell each month to cover all your costs. Know it, and know your actual profit each month. Monthly management accounts give you both.
Why it matters
One of my clients thought they were running at 15% profit. Once we cleaned up the numbers, it turned out to be less than 6%. That one bit of clarity changed everything: their pricing, their spending and their confidence.
When you know your numbers, you make better decisions. You stop second-guessing yourself and start growing with intent.
How to start
- Put all five on one page. A simple scorecard is enough.
- Fill it in on a rhythm. The first three every week, the last two every month.
- Review it at the same time each week, and act on what it tells you.
Tracking a scorecard is one of the steps in how to write a 90-day business plan.
How confident are you?
How sure are you that you know your monthly break-even and profit?
- A. Crystal clear: we track them monthly
- B. A rough idea, but not exact
- C. Not really sure: it's on the list
- D. No idea, if I'm honest
If you answered C or D, you're not alone, and it's the best place to start.
Frequently asked questions
What is a break-even point? The amount you need to sell each month to cover all your costs, so you're neither making nor losing money. Anything above it is profit.
How often should I check my business numbers? Leads, conversion and average sale every week. Gross margin, break-even and profit every month, ideally from monthly management accounts.
Want help getting clear on your numbers?
Book a free strategy call and we'll look at your numbers together and work out which ones matter most for you.