Running a service business isn’t just about delivering great work, it’s about staying on top of the numbers that keep everything running smoothly.
A lot of business owners look at their bank balance and think that’s enough. But on its own, it doesn’t tell the full story. There are usually early warning signs (and opportunities) sitting just under the surface.
Here are five key things we’d always want clients to keep an eye on, and what to do if they’re not quite where you’d like them to be.
1) Revenue
Revenue is your headline number, what you’ve billed or earned over a period of time. But it’s not just about the number itself, it’s about the pattern.
A few useful questions:
- Is it growing, flat, or starting to dip?
- Do you notice any seasonal trends?
- Is too much of it coming from one or two clients?
What to do with it:
Look at it month on month and year on year.
Break it down by service line. This often highlights what’s really working (and what isn’t).
Use it as a starting point for cashflow planning, because revenue on paper doesn’t always mean cash in the bank.
2) Profit (not just turnover)
You can be busy and still not be making much money. We see this quite a lot.
Profit is what tells you whether your business model is actually working.
Two key things to look at:
- Gross profit which is what’s left after delivery costs
- Net profit which is what’s left after everything
What to do with it:
Track your profit margin (percentage) as well as the pound amount.
If it’s slipping, it’s usually down to pricing, scope creep, or inefficiencies in delivery.
Don’t wait until year end. Checking this monthly keeps you ahead of any issues.
3) Cash balance
This is the one that tends to keep people awake at night.
Your cash balance is what determines whether you can pay wages, tax, suppliers and yourself on time.
Two helpful ways to think about it:
- What does your cash look like today?
- How long would it last if income slowed down?
What to do with it:
Aim to keep a buffer, often one to three months of core costs.
Use a simple rolling cashflow forecast to spot any tight spots early.
Remember that profit and cash are not the same thing. Timing makes a big difference.
4) Fixed vs variable costs
Understanding your costs properly makes decision making much easier, especially when you’re growing or thinking about hiring.
In simple terms:
Fixed costs stay broadly the same, such as software, salaries and rent
Variable costs move with your workload, such as subcontractors, materials and fees
What to do with it:
Review costs every few months and ask “Do we still need this?”
Watch out for the quiet ones, subscriptions and tools that slowly build up.
If things feel tight, fixed costs are usually the first place to look because they don’t flex.
5) Debtors, creditors and debtor days
This is where many service businesses get caught out.
You’ve done the work, sent the invoice, and then you’re waiting.
Debtors are money owed to you
Creditors are money you owe
A really useful number here is debtor days, which shows how long, on average, it takes for clients to pay.
What to do with it:
Track debtor days monthly and set a target.
Tighten up how and when you invoice.
Follow up early. It’s much easier to stay on top of it than to chase later.
Keep an eye on when bills are due so you’re not hit with everything at once.
Your next step: a simple monthly finance check-up
If you want to feel more in control of your finances, keep it simple:
Pick a date each month for a quick check in
Review these five areas
Decide on one action to take
That’s it.
It doesn’t need to be complicated, but doing it regularly makes a big difference.
And if you’d like a bit of help putting this into place, whether that’s clearer reports, better cashflow visibility, or just making the numbers easier to understand, we’re always happy to chat.