Is Your Business Actually Making Money? 7 Numbers Every Business Owner Should Know
Your sales are going up. There is money coming into the bank. You’re busier than ever.
So the business must be doing well… right?
Not necessarily.
One of the easiest mistakes to make as a business owner is to judge how well the business is doing by looking at sales or the balance in the bank account. Neither tells you the full story about your business profit or financial health.
You don’t need to understand complicated accounting reports to know whether your business is healthy. But there are a few numbers worth keeping an eye on, and once you understand what they mean, they can tell you a lot about where your business is really heading.
01. How much are you actually selling?
Sales are usually the easiest number to follow and often the one business owners focus on most. Growing sales are a positive sign, but on their own they don’t tell you whether the business is becoming stronger.
What matters is what is happening to your costs at the same time. If sales increase by 20% but the cost of running the business increases by 30%, you’re busier and turning over more money, but the business may actually be moving backwards.
This is why I would never look at sales growth in isolation. I would always want to know: did profit grow with it?
BUSINESS A
£100,000 sales
£15,000 left as profit
BUSINESS B
£60,000 sales
£22,000 left as profit
Business A is much bigger if we only look at sales. But Business B actually leaves more money behind.
This is why “I had my best sales year ever” and “I had my most profitable year ever” are not necessarily the same thing.
02. How much does it cost you to actually do the work?
Some costs increase naturally when you sell more. A tradesperson buys more materials. A consultant may use more subcontractor time. A photographer may have editing or production costs attached to particular jobs.
The important question is whether those costs are growing in proportion to what you’re charging.
If the cost of delivering your service has increased but your prices haven’t moved for three years, every new sale may be worth less to you than it used to be.
This is one of the first places I would look if a business owner told me: “I’m busier than ever, but I don’t feel like I’m making any more money.”
In accounting terms, the amount left after these direct costs is your gross profit, but the important part isn’t the terminology. It’s knowing whether each sale is still worth doing.
03. How much is actually left after running the business?
Once all the other costs of running the business are included: software, insurance, accounting, marketing, rent, subscriptions and everything else, you get a much clearer picture of what the business is actually producing for you.
The number to watch isn’t only the profit itself. Watch how it changes compared with previous months or years.
If sales have increased from £60,000 to £80,000 but profit has barely moved, something deserves attention. Maybe prices haven’t kept up with costs. Maybe overheads have quietly grown. Maybe a service that keeps you extremely busy isn’t particularly profitable.
Those are much more useful questions than simply asking whether turnover went up.Not sure which costs your business can claim? See our guide to Sole Trader vs Limited Company Expenses: What Can You Actually Claim?
04. How much do you keep from every £100 you sell?
Two businesses with the same profit can be performing very differently.
If one business needs £100,000 of sales to produce £20,000 of profit and another produces the same £20,000 from £60,000 of sales, the second business is keeping much more of every pound it earns.
This is why your profit margin is worth knowing. It gives you a way to compare your business with itself over time, regardless of whether sales are £40,000 or £140,000.
A falling margin can be an early warning sign. Sales might still look healthy while rising costs, underpricing or inefficient work are gradually eating into what you keep.
05. How much money are customers still holding?
A sale isn’t particularly useful for cash flow until the customer actually pays you.
If unpaid invoices are increasing month after month, the problem isn’t simply that some customers are slow. Your business is effectively financing those customers while still having to pay its own bills.
Look at how much is outstanding, but also look at how old those invoices are. £10,000 due from customers isn’t necessarily alarming if most of it was invoiced last week. The same £10,000 still unpaid after 60 or 90 days tells a very different story.
If this number is growing faster than your sales, I would want to understand why.
06. How much cash do you actually have available?
Your bank balance matters, but it needs context.
A healthy business needs enough cash to deal with normal bills, quieter months and unexpected costs without the owner constantly moving money around or waiting for the next customer payment.
Instead of looking only at today’s balance, ask: if no customer paid me for the next month, could the business comfortably cover its commitments?
That question often tells you much more about financial resilience than the balance you happen to see in the bank today.
A profitable business can still run into trouble if cash is consistently tight, which is why profit and cash need to be watched together.
07. How much of your bank balance is already spoken for?
Seeing £20,000 in the business bank account can create a false sense of security if part of that money is already needed for VAT, Corporation Tax or Income Tax, payroll, suppliers or other upcoming commitments.
You can also find guidance on business tax and the taxes your business may need to pay on GOV.UK.
I prefer to think about available cash, rather than simply the bank balance.
If £20,000 is in the account but £8,000 will be needed for tax and £5,000 for bills due shortly, you don’t really have £20,000 available to make business decisions with.
Knowing what is already committed makes decisions about taking money out, investing in equipment, hiring someone or increasing spending much safer.If you’re also deciding whether your current business structure still makes sense as your profits grow, read Sole Trader vs Limited Company: When Is It Actually Worth Going Ltd?
What I would look at to understand your business profit?
I wouldn’t judge a business from one number.
If sales were growing but cash felt tight, I would look at whether customers were paying more slowly and whether costs had increased.
If the owner was busier but profit hadn’t improved, I would look at pricing, margins and which services were actually generating the profit.
If profit looked healthy but there was never much money available, I would look at where the cash was going and what commitments were coming up.
And most importantly, I would compare these numbers over time. One month rarely tells the whole story. The direction the numbers are moving in is often much more useful.
Good accounting shouldn’t just tell you what happened. It should help you understand why it happened, and what you might need to look at next.
Want a clearer picture of how your business is really doing?
Your accounts should give you more than numbers for a tax return.
Understanding what is changing, and why can help you make better decisions about pricing, spending and the future of your business.
If you’d like support making sense of your business finances, let’s talk.
Last updated: September 2026
