We’ve covered bookkeeping fundamentals and mistakes to avoid. Now comes the exciting part—turning those numbers into actionable insights that drive real growth.

Your books tell a story about what’s working, what’s not, and where your biggest opportunities lie. Let’s learn to read that story.

Start With Profit Margins, Not Just Revenue

Revenue milestones are exciting, but profit margins tell the real story. Calculate profit margin for each service: (Revenue – Direct Costs) ÷ Revenue × 100.

You might discover your most popular offering barely breaks even while a rarely promoted premium service has margins twice as high. This doesn’t mean abandoning low-margin offerings—they might serve strategic purposes—but you should make conscious decisions about pricing and promotion.

Identify Your Real Cost Drivers

Pull up your profit and loss statement from the past six months. Look at expenses as percentages of revenue. Which categories consistently represent the largest chunks?

One client realized they were spending 35% of revenue on contract labor—far above industry benchmarks. By bringing one role in-house and renegotiating rates, they reduced that to 22% while improving quality. That 13% difference transformed a struggling business into a profitable one.

Track the Metrics That Actually Matter

Generic statements are useful, but powerful insights come from tracking metrics specific to your business model.

Subscription businesses need monthly recurring revenue and churn rate. Service providers need utilization rates and average project value. Retail operations need inventory turnover.

Identify three to five numbers that best indicate your business health, then set up a dashboard to monitor them monthly. When metrics move in the wrong direction, you’ll catch problems early.

Use Historical Data to Forecast Smarter

Your past data can help you anticipate future needs with surprising accuracy. Look for seasonal patterns—many businesses experience predictable fluctuations.

Create a simple rolling forecast for the next three to six months based on historical trends. When you know February is historically slow and December peaks, you can make smarter decisions about marketing timing, maintenance scheduling, and cash reserves.

Benchmark Against Industry Standards

Research financial benchmarks for businesses similar to yours. How do your profit margins compare? What about overhead expenses as a percentage of revenue?

If you’re significantly out of line with industry norms, investigate why. One client discovered they were spending double the industry average on administrative overhead due to overly complex approval processes. Streamlining cut costs by 40% without reducing quality.

Make Data-Driven Growth Decisions

Before significant investments, model the financial impact. If you hire someone at $50,000 annually, how much additional revenue must they generate? Based on your profit margins and their expected productivity, is that realistic?

Before a major marketing campaign, review historical customer acquisition costs and lifetime value. How much can you afford to spend per new customer while maintaining healthy margins?

These projections won’t be perfect, but they help you make calculated risks rather than blind leaps.

Create Accountability Through Regular Reviews

Establish a monthly financial review meeting with yourself or your leadership team. Block out an hour to review statements, compare actual performance to projections, and discuss what the numbers reveal.

Come with specific questions: Why did expenses spike? What drove the revenue increase? Are we on track for quarterly goals?

Document insights and actions, then follow up next month to see if those actions had the intended effect. This creates continuous improvement where you’re constantly learning and refining.

Your Action Steps This Week

Don’t let this remain theoretical:

• Calculate profit margin for each main product or service
• Identify your three most important financial KPIs and create a simple tracking method
• Schedule your first monthly financial review as a recurring appointment

The difference between businesses that thrive and those that survive often comes down to how well they understand and use their financial information. You’re already maintaining your books—now make that investment pay off.

Next week, we’ll explore preparing for tax season success, including maximizing deductions and minimizing stress. But first, commit to engaging with your financial data at a deeper level. The insights are waiting for you.

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About the Author:

Joe Herskowitz, EA, is the President and CEO of Lionstone Bookkeeping+, where he helps small and medium-sized businesses take control of their finances with expert bookkeeping and financial insights. With years of experience in business finance, Joe is passionate about making numbers work for business owners—not against them.

Have a bookkeeping or business finance question?

Reach out to Joe at [email protected] or call/text 732-803-7793 (no WhatsApp).