Money stress can drain your focus and your sleep. You work hard to keep your doors open. You deserve clear signs that your business is actually healthy. This blog gives you five simple numbers that show if your business is strong or at risk. You will see how cash, profit, debt, and customer payments tell a hard truth. You can then adjust before a shortfall turns into layoffs or closure. Many owners trust gut feelings or busy schedules. That is risky. You need steady checks, not guesses. These same metrics also help you talk with banks, partners, and small business tax services in a clear way. You do not need a finance degree. You need a clear method and the courage to look at the numbers every month. The goal is simple. Protect your business, protect your staff, and protect your own peace of mind.
Why these five numbers matter
You face rising costs, slow payments, and sudden repairs. You cannot control every hit. You can control how early you see trouble. These five metrics give you that early warning. They also show you what is working so you can repeat it.
You will track:
- Cash runway
- Profit margin
- Debt coverage
- Customer payment speed
- Break even point
You can pull each number from your bank records and simple reports. You can review them each month in less than one hour.
Metric 1. Cash runway
Cash keeps the doors open. When cash runs out, your choices shrink. Cash runway shows how many months you can pay your regular bills with the cash you have today.
How to measure
- Step 1. Add up your cash in bank.
- Step 2. Add up your average monthly expenses.
- Step 3. Divide cash by monthly expenses.
If you have 30,000 in cash and 10,000 in monthly costs, you have 3 months of runway.
What to aim for
- Stronger safety. 3 to 6 months of runway.
- Higher risk. Less than 2 months of runway.
You can see more on cash flow basics from the U.S. Small Business Administration at SBA planning steps.
Metric 2. Profit margin
Sales feel good. Profit keeps you alive. Profit margin shows how much money you keep from each dollar of sales after costs.
How to measure
- Step 1. Find your total sales for the month.
- Step 2. Subtract all expenses. That result is profit.
- Step 3. Divide profit by sales.
If you sell 50,000 and your profit is 5,000, your profit margin is 10 percent.
What to aim for
- Healthy margin. Enough to cover slow months and growth.
- Warning sign. Margin that shrinks month after month.
When profit margin falls, you raise prices, cut waste, or both. You do not wait.
Metric 3. Debt coverage
Debt can help you grow. It can also choke you. Debt coverage shows if your regular profit can cover your loan payments.
How to measure
- Step 1. Add up your yearly profit before interest and taxes.
- Step 2. Add up your yearly loan and interest payments.
- Step 3. Divide profit by those payments.
If your profit is 60,000 and your yearly loan payments are 30,000, your coverage is 2. You earn twice what you need to pay debt.
What to aim for
- Safer zone. Coverage of 1.5 or higher.
- Danger zone. Coverage below 1.2.
Low coverage means one slow season could cause missed payments. You then talk with your lender early and adjust.
Metric 4. Customer payment speed
Many small firms fail even with strong sales. The reason is late payments. Customer payment speed shows how fast you collect what you are owed.
How to measure
- Step 1. Find your average amount owed by customers.
- Step 2. Find your yearly sales on credit.
- Step 3. Divide the amount owed by daily sales.
If customers owe 40,000 and your average daily sales on credit are 2,000, you wait about 20 days to get paid.
What to aim for
- Faster payments. Fewer days waiting for cash.
- Clear terms. Simple invoices and clear due dates.
You can shorten this time with clear policies and quick follow up on late bills.
Metric 5. Break even point
Break even is the sales you need each month to cover all costs. Below that line, you lose money. Above it, you gain.
How to measure
- Step 1. Add up your fixed monthly costs like rent and salaries.
- Step 2. Find your average profit per sale.
- Step 3. Divide fixed costs by profit per sale.
If fixed costs are 20,000 and you keep 20 from each 100 sale, you need 100,000 in sales to break even.
You then compare your break even number to your actual monthly sales. You adjust prices, costs, or both if you sit near or below that line.
Sample financial health check table
You can use a simple table like this each month. You can mark where you stand and what needs action.
Put the numbers to work
You do not need to guess. You can set one evening each month to update these five numbers. You can save them in a simple sheet. You can also ask a trusted advisor to review them with you.
The Federal Reserve offers small business credit studies that show how many owners face cash strain. You can read more at Federal Reserve small business survey. You are not alone. You are also not powerless.
When you track these metrics, you move from fear to choice. You see trouble early. You protect your business and every person who depends on it.
