15 Numbers Every Small Business Owner Should Know

Hard work doesn't fix a number you don't know: a price that never covered the cost of the job, a hire the work couldn't pay for, a tax bill nobody set money aside for. In the Federal Reserve's most recent survey of employer firms, 75% cited rising costs as a financial challenge, 56% had trouble paying operating expenses, and 51% reported uneven cash flows. ^[1]

None of the numbers below take an accountant to calculate. Each one answers a question owners face every month. For each, we give the question it answers, the formula, a short example, and the mistake that trips people up. Ten of them link to one of our eight free Groundwork calculators, which do the math for you.

The examples use round, made-up figures to show the arithmetic. They are not industry averages.

How we chose these fifteen

We started from the decisions small owners make most often: setting a price, deciding whether to hire, borrowing, paying taxes and judging advertising. For each decision we kept the one or two numbers that most directly answer it, using standard definitions from the U.S. Small Business Administration, the IRS and the Social Security Administration. [2–8] We left out ratios that matter more to investors and lenders than to an owner running the business day to day.

They fall into four groups: pricing and profit (1–6), customers and marketing (7–9), cash and taxes (10–12), and people and growth (13–15).

Pricing and profit

1. Gross profit margin. Does each sale actually make money? Gross margin = (price − cost of the sale) ÷ price. A job that sells for $120 and costs $80 in materials and labor has a gross margin of $40 ÷ $120 = 33.3%. The mistake is leaving out direct labor, especially your own. If you spend two hours on the job, those hours are part of its cost. Profit margin calculator

2. Markup versus margin. Am I charging what I think I'm charging? Markup = profit ÷ cost; margin = profit ÷ price. The same $40 of profit is a 50% markup and a 33.3% margin. Owners who add a 50% markup and believe they earn a 50% margin are off by a third. To price for a target margin, divide the cost by (1 − margin): an $80 cost at a 50% margin needs a $160 price. Profit margin calculator

3. Net profit margin. After everything, what's left? Net margin = net profit ÷ revenue for the same period, after every expense: overhead, interest and taxes. $1,500 of net profit on $12,000 of sales is 12.5%. Be clear whether your own pay is counted as an expense. If it isn't, a "profitable" business may simply be paying you nothing. ^[2]

4. Break-even point. How many jobs before the business covers its bills? Break-even jobs = monthly fixed costs ÷ (price − cost per job), rounded up. A detailer with $2,000 of monthly fixed costs who earns $105 per car after supplies needs 20 cars a month to break even, and 48 to also pay herself $3,000. The mistake is dividing by the price instead of by what each job contributes after its own costs. ^[3] Break-even calculator

5. Your minimum rate. What's the least I can charge an hour and stay in business? Minimum rate = (your pay + business costs + self-employment tax on your pay + a profit cushion) ÷ billable hours a year. The trap is the denominator. Nobody bills 2,080 hours a year: travel, quotes, admin and marketing eat into every week. A bookkeeper who works 40 hours a week but bills 65% of them for 48 weeks has 1,248 billable hours, not 2,080. What should I charge? calculator

6. The price change math. If I raise prices, how many customers can I afford to lose? Sales you can lose = 1 − (profit per sale now ÷ profit per sale after the change). With a $100 price and $40 cost, a 10% increase lifts profit per sale from $60 to $70, so you could lose 14.3% of sales and make the same gross profit. A 10% discount does the opposite: it drops profit per sale to $50 and needs 20% more sales just to stand still. Price increase calculator

Customers and marketing

7. Customer acquisition cost. What does a new customer cost me? Acquisition cost = marketing and sales spending in a period ÷ new customers won in that period. $1,200 of ads and promotion that brings 12 new customers is $100 a customer. Decide up front what counts (ad spend only, or also your time and tools) and keep the definition the same month to month, or the trend means nothing.

8. Customer lifetime value. What is a customer worth over the whole relationship? A simple version: profit per period from a customer × the number of periods they typically stay. A cleaning customer who brings $60 a month of profit after supplies and labor, and stays 18 months, is worth about $1,080. Use profit, not revenue. Comparing revenue-based lifetime value with acquisition cost makes almost any marketing look affordable.

9. Return on ad spend. Are the ads bringing in more than they cost? Return on ad spend = revenue traced to the ads ÷ ad spend. $4,000 of sales from $1,000 of ads is 4.0×. But that's revenue, not profit: at a 30% gross margin, those $4,000 of sales produced $1,200 of gross profit on $1,000 of ads, a thin result. Judge ads by the profit they bring, and be honest about which sales they actually caused.

Cash and taxes

10. Cash runway. If sales stalled, how long could I keep going? Runway in months = available cash ÷ net monthly cash burn (cash going out minus cash coming in). $24,000 in the bank with a $4,000 monthly shortfall is six months. If cash coming in already covers cash going out, there is no burn and runway isn't a meaningful number; plan for the big one-time bills instead. Cash runway calculator

11. Ending cash. Will there be enough money in the account when the bills come due? Ending cash = starting cash + cash in − cash out, month by month. Profit and cash are different things. A business can show a profit on paper and still miss payroll because customers pay in 45 days and the rent is due on the 1st. A simple twelve-month cash forecast in a spreadsheet catches most surprises before they happen.

12. Your tax set-aside. How much of each payment belongs to the IRS? If you're self-employed, no one is withholding tax for you. Self-employment tax alone is 15.3% of 92.35% of your net earnings in 2026, for Social Security (on the first $184,500) and Medicare, before any income tax. [4, 6] On $60,000 of profit, a single filer with no other income owes about $8,478 of self-employment tax and roughly $4,511 of federal income tax, around 22% of profit before state tax. ^[5] If you'll owe $1,000 or more, the IRS generally expects quarterly estimated payments. ^[7] Self-employment tax calculator

People and growth

13. The true cost of an employee. What will this hire really cost a year? True cost = wages + employer Social Security and Medicare (7.65%) + federal and state unemployment tax + workers' comp + benefits + payroll and hiring costs. ^[8] A $17-an-hour cleaner working 30 hours a week costs $26,520 in wages and, with taxes, insurance and first-year hiring costs, about $30,634 in our example. The rest depends on your state and industry, so get real quotes. Cost of hiring calculator

14. Hiring break-even. Will the work this person does pay for them? Revenue the hire must bring in = true cost ÷ (1 − supplies and other job costs as a share of revenue). In the example above, with 10% job costs, the hire needs about $34,000 a year of new revenue, about 14.5 billable hours a week at $45 an hour. Count only billable hours; drive time between jobs is paid but earns nothing. Cost of hiring calculator

15. Loan payment and coverage. Can the business carry this loan? Monthly payment follows the standard loan formula; coverage = monthly profit ÷ monthly payment. A $50,000 loan at 10.5% over seven years costs about $843 a month and $20,815 in interest. With $1,500 a month of profit, coverage is about 1.8 times the payment; with $800, the business can't make the payment from profit. Compare loans by total cost, not monthly payment: a longer term lowers the payment and raises the cost. ^[9] Business loan calculator

Where to start

You don't need all fifteen at once. If you're starting out, work out numbers 5 and 4 before you take your first customer: your minimum rate, then how many jobs that rate needs to cover your costs. If you're already open and money feels tight, start with 1, 2 and 11: whether each sale makes money and when cash runs short. If you're about to make a big move, such as hiring, borrowing or raising prices, run 13 and 14, 15 or 6 before you commit.

Write your numbers down, date them, and check them again in three months. The value is in watching them change.

What these numbers can't tell you

Every formula here is a simplification. They assume your average price and cost hold steady, and they treat the future like the recent past. They don't know your market, your competitors or how your customers will react. A number that looks healthy can hide a problem (one large customer, a seasonal swing, a debt coming due), and a number that looks bad can be the price of a smart investment. Use them to ask better questions, not as a verdict.

Anticipated Questions

I'm not a numbers person. Which one matters most?

If you only learn one, learn break-even (number 4). It forces you to know your fixed costs, your price and your cost per job, and it tells you how many sales you need just to stay open. Most of the others build on those same three figures.

My accountant already gives me reports. Why do I need these?

Reports describe last month. These numbers help you decide next month: whether to raise a price, hire, borrow or spend on ads. Ask your accountant to show you numbers 1, 3 and 11 from your own books; the rest you can work out yourself.

Are there healthy targets for these numbers?

Targets differ so much by industry that a single benchmark often misleads. A grocery store and a consultant live on very different margins. Compare your numbers with your own past months first, and with industry data only when it comes from a reliable source for your type of business.

Are the calculators really free? What do you do with my numbers?

Yes, and nothing. The calculators run on your own phone or computer; what you type isn't sent to us or stored. We count how often each calculator is used, never what anyone typed.

How often should I check these?

Pricing and break-even whenever your costs or prices change, cash every week, tax set-aside every time you're paid, and the rest before any big decision. A quick monthly look at margin, break-even and cash catches most problems early.