Know your bottom line.

Revenue is the loudest number in a business. It’s on every invoice, it’s the answer when somebody at the rink asks how busy you are, and it’s the number that grows when you work harder. It’s also the number that says the least about how the business is actually doing.

The bottom line is what’s left after everything has been paid — materials, subs, wages, fuel, insurance, software, interest, all of it. It’s what the business made, as opposed to what it moved. I spent nine years reading small-business financials on the lending side, and that was the first number I went looking for — because loan payments don’t come out of revenue. They come out of what’s left.

The three numbers between “sold” and “kept”

1. Gross margin. What’s left after the direct cost of the work — materials, subcontractors, the crew’s hours on the job. Sell $10,000 of work that costs $6,500 to deliver, and your gross margin is $3,500 — 35%. That’s the money available to run everything else.
2. Overhead. What it costs to keep the doors open before you sell a thing — rent, insurance, the truck, the software, the phone, you.
3. The bottom line. Gross margin minus overhead. Not what you billed — what you made.

Why owners lose track of it

Revenue shows up whether you look or not — it’s in the bank feed, it’s in the deposits. The bottom line only shows up when the books are current and somebody actually reads the statement. If the books run three months behind, you find out what kind of year it was in February — when the choices that would have fixed it are already behind you.

Three things to do this week

1. Open last month’s profit and loss and read the last line. If you can’t put your hands on it inside five minutes, that’s finding number one.
2. Set it beside the same month last year. Up or down is a conversation. “I don’t know” is a problem.
3. Do the rough break-even: monthly overhead divided by your gross-margin percentage. That’s the sales you need every month before you make a dollar. Write it where you’ll see it.

When your file lands on a lender’s desk, the bottom line does most of the talking. Revenue starts the conversation; profit is what gets it approved. Know the number — it changes how you price, how you hire, and how you sleep.

Notes like this are general information, not advice on your specific situation — that’s what the kitchen table is for. — Dominic