What Financial KPIs Should You Track? (For Small, Service-Based Businesses)
You’re running jobs, sending invoices, and staying busy — but how do you really know if your business is doing well?
That’s where KPIs (Key Performance Indicators) come in.
KPIs are simple numbers that give you a quick snapshot of how your business is performing financially. And no — you don’t need to be a CPA or CFO to use them. If you’re a solo cleaner, handyman, home inspector, or any type of service-based business owner, tracking just a few key metrics can help you stay profitable and in control.
Here are the top financial KPIs you should be tracking (even if you hate math).
1. Net Profit
What it is:
The money left after all expenses are paid — your real profit.
Why it matters:
Revenue is great, but profit is what you take home. This shows if your business is truly sustainable.
Formula:
Net Profit = Revenue – Expenses
Note: Healthy net profit margins depend on your industry.
2. Gross Profit Margin
What it is:
Your earnings before overhead expenses — shows how profitable your services are.
Formula:
(Revenue – Cost of Goods Sold) ÷ Revenue × 100
Why it matters:
This helps you price your services correctly. If your margin is low, you’re probably undercharging or overspending on materials or labor.
3. Monthly Revenue
What it is:
Total money coming in each month.
Why it matters:
Tracking your monthly revenue trends shows seasonality, growth, or slow periods. It also helps you forecast future cash flow.
Pro tip: Compare each month to the same month last year to spot long-term growth.
4. Accounts Receivable Aging
What it is:
The amount of money clients owe you — and how long they’ve owed it.
Why it matters:
Unpaid invoices can crush your cash flow. You’re not a bank — track who owes you, how much, and how long it's been outstanding.
Goal: Keep most of your AR under 30 days.
5. Operating Expense Ratio
What it is:
The percentage of your income that goes toward running the business (excluding COGS).
Formula:
Operating Expenses ÷ Revenue × 100
Why it matters:
This tells you if your business is lean or bloated. A high ratio might mean it’s time to cut unnecessary spending.
6. Cash Reserves (Emergency Fund)
What it is:
How much money you have set aside to cover slow months, emergencies, or unexpected expenses.
Why it matters:
You’ll sleep better knowing you have 1–3 months of operating expenses saved up.
Goal: Start with 1 month saved and build from there.
7. Debt-to-Income Ratio (DTI)
What it is:
How much debt your business carries compared to your income.
Formula:
Monthly Debt Payments ÷ Monthly Revenue
Why it matters:
Helps you assess whether your business can comfortably handle its loans and obligations.
8. Owner’s Draw or Pay
What it is:
How much money you’re actually taking home from your business.
Why it matters:
Your business should support you. If you’re not paying yourself consistently, something in your pricing or expenses may need adjusting.
Final Thoughts
You don’t need to track every number — just the ones that matter most. Start with these 3:
Net Profit
Monthly Revenue
Gross Profit Margin
Then add more as you go. Keep it simple, stay consistent, and check in monthly.
Need help figuring out where your numbers stand?
I offer a free Bookkeeping Health Check — we’ll look at your KPIs and identify areas to improve (no pressure, just clarity).
Contact us by clicking here
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Learn more about Ruck and Reconcile here
And as always, thanks for reading and we’ll see you next week!