Psst…Your numbers are talking to you—are you listening? Here’s a reminder that business is emotional, and it's easy to fall into decision-making based on gut feelings. But when you know your numbers, you take back control.
In this episode of Business by the Books, Danielle Hayden, reformed corporate CFO and CEO of Kickstart Accounting, Inc., dives into the 5 essential financial numbers every business owner needs to know. This isn't just about spreadsheets; it's about stepping into your power as a CEO, removing emotional guesswork, and building a healthy, sustainable business.
5 Key Metrics for Your Business:
- Know Your Rolling 12-Month Revenue: One month of income doesn't tell the full story, instead look at the full year to see growth trends and forecast with confidence.
- Track Rolling 12-Month Profit: Revenue may be impressive, but it’s your profit that reveals if you’re actually building a healthy business.
- Calculate Average Monthly Expenses: Knowing your baseline costs prepares you for the unexpected and helps you build a proper emergency fund.
- Monitor Average Monthly Profit: This is your opportunity fund—it’s what you use to pay yourself, invest back into your business, and plan for growth.
- Review Year-to-Date Owner’s Draws & Debt Payments: These aren’t reflected in profit but have a huge impact on your cash. Track them to know where your money really goes.
⭐ Pro Tip for Kickstart Clients: If you're already a Kickstart Accounting, Inc. client, your monthly KSA financial Snapshot includes all 5 of these key metrics—no digging required! Pull up your Snapshot and follow along with this episode!
Topics Discussed:
Why These 5 Essential Business Numbers Matter (00:28 – 03:32)
The Power of a Rolling 12-Month View (01:49 - 05:13)
The Truth About Profitability & Building a Financial Safety Net (05:13 – 06:26)
Finding Out Where Your Cash Is Going (06:49 – 08:11)
Book a Call with Kickstart Accounting, Inc.:
https://kickstartaccountinginc.com/book
Connect with Kickstart Accounting, Inc.:
Instagram | https://www.instagram.com/Kickstartaccounting
YouTube | https://www.youtube.com/@businessbythebooks
Facebook | https://www.facebook.com/kickstartaccountinginc
Episode Transcript
00:00:00:00 - 00:00:28:17
Danielle Hayden
Psst... Your numbers are talking to you. Are you listening? Welcome back to Business by the Books. I'm Danielle Hayden, reformed corporate CFO and CEO at Kickstart Accounting, Inc., where we use bookkeeping, CFO and tax services as a way to help business owners understand their numbers so they can grow and thrive. Today, we're talking about the five financial numbers that every business owner needs to know.
00:00:28:19 - 00:00:54:13
Danielle Hayden
This episode isn't just about bookkeeping. It's about creating clarity, about taking back your power and making sure that every investment you make is rooted in fact and not fear. So let's jump right in. Now, why do we need these five numbers? I want to give you a tool to strip away all that emotion so that you can prepare for the future.
00:00:54:15 - 00:01:26:04
Danielle Hayden
Business is so emotional. I had no idea when I started this business ten years ago. I had no idea how much of our self-worth and confidence, money mindset, all that is intertwined in our business, and it creates emotional decision making that should really be based on facts. When I was working as a corporate CFO, we used the numbers, the facts around the business in order to make strategic decisions,
00:01:26:06 - 00:01:49:13
Danielle Hayden
and I want to give you that same power as a CEO so that you can make strategic business decisions. These five numbers are going to give you visibility and confidence. All right, so what are the five numbers? Let's jump right in. Number one is your rolling 12-month revenue. Let's be clear, one month, it doesn't tell the story.
00:01:49:15 - 00:02:14:00
Danielle Hayden
A whole year in motion does. I love the rolling 12-month numbers in general, especially for revenue. This is the rolling last 12 months, not calendar. Right? So it is, I'm just going to take the date of this recording, it's March 31st, so we would take the last 12 months rather than just the first quarter of this year.
00:02:14:02 - 00:02:38:16
Danielle Hayden
So it smooths out all that seasonality and it gives you a true view of growth or potential decline. We can then use this number to forecast what's realistic and not to be too overly optimistic or honestly, what I see more often than not with clients is that they'll tell me, you know, Danielle, I just feel like I'm slower this year.
00:02:38:16 - 00:03:01:21
Danielle Hayden
I don't know what's going on. I just feel like, air quote “feel” like things aren't going well. And when we look at the last 12 months, it's usually better than expected. So our rolling 12-months allows us to remove that gut feeling and see what it actually is over the last 12 months. Now Kickstart Accounting, Inc. clients, here's the best news for you:
00:03:02:02 - 00:03:25:22
Danielle Hayden
You get this number every single month in your Snapshot. Our clients, they don't just receive some random profit loss statement or financial statement. We do the analysis for our clients so they don't need to do it. So this number is pointed out to you right in that Snapshot. So you can look at this every single month.
00:03:26:00 - 00:03:51:22
Aubrey Philipp
Quick break before we dive back in. If you're an entrepreneur ready to streamline your financials, Kickstart Accounting has the solution. Our proven bookkeeping services are designed for entrepreneurs like you to provide clear, accurate financial records, giving you time to focus on growing your business. Book a discovery call at KickstartAccountingInc.com/Book or click the link in the show notes.
00:03:52:01 - 00:03:57:21
Aubrey Philipp
Let's get your finances in order so you can scale with confidence. Now back to the show.
00:03:53:18 - 00:04:19:03
Danielle Hayden
Now, next is our rolling 12-month profit. Profit shows the truth beneath the revenue. Now same with the revenue, this is our 12 month window. It is not the calendar. Now we're looking at net profit. So rather revenue, top of the line of the income statement. Our profit is the bottom number on the income statement.
00:04:19:03 - 00:04:47:07
Danielle Hayden
So it's revenue minus cost of goods sold minus operating expenses. That is our net profit. And this will help you spot all the profitability trends without getting distracted by those one off or annual expenses. This is an honest view of whether you're actually growing and not just bringing in income, right? One thing that we see with our clients frequently, actually, is that growth doesn't always look the same.
00:04:47:09 - 00:05:13:01
Danielle Hayden
Bigger isn't always better. There's a lot of cost that goes into building a business, and this is something that I've seen firsthand as a CEO of a seven figure business. Our expenses have grown right along side of revenue. And so we, as business owners, we all need to know and understand our 12-month profit to run a healthy, sustainable business.
00:05:13:03 - 00:05:40:03
Danielle Hayden
We need between 10 and 15% profit so that we can continue to grow and thrive. So remember revenue, it’s that loud number but profit, it whispers. It tells you what's working and what's not working. And it's our job as the CEO to listen closely. All right, number three is our average monthly expenses. If your revenue stopped today, how long could you stay open?
00:05:40:05 - 00:05:59:16
Danielle Hayden
I used to say this kind of jokingly, but after COVID-19, I think we all know that this is a real number that we all need to know and need to know clearly. So we're going to take our total expenses over the last 12 months and divide that number by 12. This is your baseline monthly cost to operate.
00:05:59:18 - 00:06:26:13
Danielle Hayden
Now I want every single business owner to have between 1 and 3 months saved. This is your cash safety net. Now as your business grows, it gets more difficult to have three months saved, and honestly, it's probably not the best use of your cash. But depending on your risk tolerance, you'll have somewhere between 1 and 3 months worth of your average monthly expenses saved into a high yield savings account.
00:06:26:14 - 00:06:49:00
Danielle Hayden
So that's number three. Number four is our average monthly profit. This is what you get to work with. This is your CEO opportunity fund. This is the amount that you can use to determine how much to pay yourself, reinvest into marketing, team, or education. This is what you save for taxes and for big investments. This is what helps you answer:
00:06:49:01 - 00:07:11:06
Danielle Hayden
Can I afford to grow? So pull your average monthly profit number to determine how much you can pay yourself, or how much you can invest in that next new big strategy. All right, number five is our year to date owner’s draws and debt payments. Now, one of the number one questions we get from our clients is, Danielle, you're telling me that I'm profitable,
00:07:11:07 - 00:07:46:11
Danielle Hayden
but where is all of my cash? My team and I love this question. Our cash frequently goes to owner’s draws, personal expenses, tax payments, and debt repayment. These numbers don't show up in net profit, but they consume your cash. Profit is not cash, and your cash disappears here if you are not tracking it. So you need to know what your year to date draws and debt payments are to know where your cash is going.
00:07:46:13 - 00:08:11:04
Danielle Hayden
So how do you use these numbers to plan for the future? When you're thinking about hiring, expanding, launching, or increasing your pay, I want you to ask yourself, what are my numbers telling me? Do I have the profit to allow me to invest? We're not just looking at this month or this quarter. We're learning to look at the last 12 months.
00:08:11:06 - 00:08:39:03
Danielle Hayden
Use the law of averages to make decisions. All right, so let's recap the five numbers you need to know. Rolling 12-month revenue or rolling 12-month profit. Average monthly expenses. Average monthly profit. And then year to date draws, plus debt payments. This is your business dashboard, your CEO metrics. Know them, review them and use them. Your numbers are not scary.
00:08:39:04 - 00:09:05:14
Danielle Hayden
They're your secret weapon. And guess what? Kickstart Accounting, Inc. clients, you get every single one of these numbers on your Snapshot every single month. So take your Snapshot re-listen to this episode and dig in and make your next decision with confidence. All right you guys, thank you for tuning in to Business by the Books, and I'll see you next week.
00:09:05:16 - 00:09:49:05
Danielle Hayden
I hope you enjoyed today's episode of Business by the Books. Don't forget to hit like and subscribe! This is the number one way we can help other entrepreneurs find this podcast, because here at Kickstart Accounting, Inc., it is our mission to help entrepreneurs understand their numbers, get access to this information, and grow and thrive in their business. So please help me, help other entrepreneurs understand their numbers so they can finally grow and thrive.