The 3 Numbers That Finally Answer "Am I Making Money?"

Let’s be honest for a second. If someone asked you, right now, “Are you actually making money?” Not revenue. Not sales. Not busy. But actual money. Would you answer confidently… or would there be a pause?

That pause is more common than you think.

I’ve talked to plenty of smart, hardworking small business owners who are booked out, stressed out, and still quietly wondering if this whole thing is really working. The problem isn’t effort. It’s visibility.

And the good news? You don’t need 47 reports or an accounting degree to fix that.

You need just three numbers.

Why Most Small Business Owners Don’t Know If They’re Actually Making Money

Sales Are Up — So Why Does It Still Feel Uncertain?

This is where a lot of owners get stuck. Clients are coming in. Revenue looks better than last year. On paper, things seem “fine.”

But emotionally? There’s still that tight feeling in your chest when you think about hiring, raising prices, or taking time off. That disconnect usually means one thing:

You’re measuring activity… not profitability.

More work doesn’t automatically mean more money. Sometimes it just means more exhaustion.

The Bank Balance Trap (Why Cash Alone Can Lie)

Let’s talk about the bank balance for a second. It’s the number most owners check first. And honestly? I get it. It feels real. Tangible. Reassuring.

But here’s the uncomfortable truth: Your bank balance is a terrible way to tell if your business is healthy.

It doesn’t show:

Taxes you haven’t paid yet
Bills that haven’t hit
Whether this month’s income came from profitable work or underpriced chaos

You can have cash in the bank and still be slowly bleeding money. That’s not pessimism, that’s math.

This Isn’t a Failure — It’s a Visibility Problem

If this feels familiar, let me say this clearly: This isn’t because you’re bad at business.

It’s because most owners were never taught which numbers actually matter. You were told to “grow revenue,” “stay busy,” and “watch cash.” Nobody explained how to see profitability clearly. That’s what we’re fixing here.

The Only 3 Numbers You Need to Know If Your Business Is Profitable

Before we dive in, let’s clear something up.

You do not need:

A dozen dashboards
Complicated forecasts
Weekly panic-checks of your books

More reports don’t create clarity. They usually create overwhelm.

These three numbers work because they answer three different questions:

Is the business profitable overall?
Where is the money being made (or lost)?
Is the business actually supporting you?

Let’s walk through them.

Number #1 — Net Profit: The Truth Teller in Your Business

Net profit is the number that answers the big question:

After everything is paid… what’s actually left?

This is the money your business truly earns. Not before expenses. Not before taxes. After reality shows up.

What Net Profit Actually Tells You (And What It Doesn’t)

Net profit tells you:

If the business is sustainable
If growth is actually healthy
If you’re building something real — or just staying afloat

What it doesn’t tell you:

Why profit is high or low
Which parts of your business are pulling their weight

Think of net profit like a health check engine light. It tells you something’s going on… but not where to look next.

Healthy Net Profit Margins for Small Businesses (What’s “Normal”)

Owners always ask this question: “What’s a good net profit margin?”

The honest answer: it depends.

But generally speaking, many service-based small businesses land somewhere around 10–20% when things are healthy.

If you’re consistently below that, it doesn’t mean you’re failing. It means something deserves a closer look.

And that’s where number two comes in.

Why You Can Feel Busy, Booked, and Still Be Unprofitable

This is one of the hardest pills to swallow.

You can be:

Fully booked
Working nights and weekends
Turning away clients

…and still not making real money.

That usually means expenses are growing just as fast — or faster — than revenue. Labor costs creep. Subscriptions pile up. Pricing hasn’t kept up with reality.

Net profit shows you that something’s wrong. Gross profit shows you where.

Number #2 — Gross Profit Margin: Where the Money Starts to Leak

Gross profit margin is the number most small business owners ignore… and the one that quietly explains everything.

It answers this question:

After delivering the work, how much money is left before overhead?

What Gross Profit Really Measures (In Plain English)

Gross profit looks at:

Revenue
Minus the direct costs to deliver that revenue

For service businesses, that’s usually labor, contractors, and materials.

What’s left is what pays for:

Software
Marketing
Rent
Admin
And eventually… profit

If this margin is weak, the business struggles no matter how busy you are.

The Silent Killers: Underpricing, Labor Creep, and Rising Costs

Here’s where most money leaks happen quietly.

Services priced years ago that never increased
Team members taking longer as scope slowly expands
“Small” costs that feel harmless individually

None of these feel dramatic. Together, they crush margins. And the worst part? Owners often double down on these services because they seem popular.

How to Spot Unprofitable Services Before They Burn You Out

This is where clarity starts to feel empowering.

When you look at gross profit by service, patterns jump out fast:

The work you dread often pays the least
The easiest jobs are sometimes the most profitable
Your “flagship” offer might be undercutting you

Once you see this, decisions get simpler:

Raise prices
Redesign offers
Or let certain work go entirely

No guesswork required.

Number #3 — Owner Pay vs. Profit: Are You Actually Supporting Yourself?

This is the number that hits closest to home. Because at the end of the day, your business isn’t just an entity. It’s supposed to support you.

Why Owner Pay Confusion Creates Stress (Even in “Successful” Businesses)

Many owners mix these up:

Profit
Owner’s draws
Personal income

So they’re constantly wondering:

Am I taking too much?
Not enough?
Am I hurting the business?

That mental tug-of-war creates constant anxiety.

The Difference Between Paying Yourself and Having a Profitable Business

Here’s the key distinction:

Owner pay is compensation.

Profit is what’s left after the business pays everyone, including you.

A business can:

Pay the owner
And still not be profitable

That’s not a moral failing. It’s just math. But without seeing this clearly, owners make decisions from fear instead of facts.

How This Number Impacts Hiring, Pricing, and Growth Decisions

When you understand owner pay vs. profit, everything changes.

You know:

If the business can afford another hire
Whether a price increase is overdue
If growth will help… or hurt

Confidence replaces hesitation.

How These 3 Numbers Work Together (And Why One Alone Isn’t Enough)

This is where the magic happens.

Net profit tells you if the business works
Gross profit shows you where it works
Owner pay shows you who it’s working for

Looking at only one creates blind spots. Looking at all three creates clarity.

Why Net Profit Without Margin Context Can Be Misleading

You can have:

A decent net profit this year
While margins quietly shrink

That’s usually a warning sign, not a victory lap. Margins tell you whether success is repeatable… or fragile.

How to Use These Numbers as a Monthly Financial Check-In

This doesn’t need to be complicated.

Once a month:

Check net profit
Review gross profit trends
Confirm owner pay still makes sense

Fifteen minutes. That’s it! That habit alone eliminates most financial anxiety.

How Often You Should Review These Numbers (Without Living in Your Books)

You don’t need daily updates. You don’t need obsession. You need consistency.

A 15-Minute Monthly Review That Builds Real Confidence

Set a recurring reminder. Same day each month.

Ask:

Did profit improve or decline?
Did margins shift?
Did anything surprise me?

Surprise is the signal. That’s where insight lives.

What to Look At Before Making Any Big Decision

Before you:

Hire
Raise prices
Take on debt
Invest in marketing

Check these three numbers. They’ll either give you the green light… or save you from regret.

What to Do If These Numbers Don’t Look Good (No Panic Required)

Bad numbers aren’t a verdict. They’re information.

The Difference Between Fixable Issues and Real Red Flags

Fixable:

Pricing issues
Cost creep
Inefficient services

Red flags:

Chronic losses
No improvement over time
Owner pay masking deeper problems

One requires tweaks. The other requires a bigger conversation.

Common Profit Leaks You Can Address Quickly

Start small:

Cancel unused subscriptions
Reprice your lowest-margin service
Tighten scope creep

These changes add up faster than you’d expect.

When Better Bookkeeping Isn’t Enough (And What Actually Helps)

Clean books are step one. But interpretation is what creates confidence.

If numbers still feel confusing, it’s often because no one’s helping you connect them to real decisions.

The Real Win: Decision Confidence, Not Perfect Books

This is the part no spreadsheet shows.

When you trust your numbers:

You sleep better
You stop second-guessing
You lead your business instead of reacting to it

What Changes When You Finally Trust Your Numbers

Owners tell me the same thing: “I didn’t realize how much mental energy this was taking.”

Clarity lifts that weight.

Why This Clarity Is Often the Turning Point for Small Businesses

This is usually the moment when:

Growth becomes intentional
Stress drops
The business finally supports the owner, not the other way around

And it starts with three numbers.

Frequently Asked Questions About Knowing If Your Business Is Making Money

How do I know if my business is profitable but cash-poor?

Look at net profit alongside cash flow. Profitability and timing aren’t the same thing.

Can a business survive with low net profit?

Short term, yes. Long term, it becomes exhausting.

Why does my accountant say I’m profitable but I feel broke?

Because profit doesn’t equal cash in hand — timing and structure matter.

What’s the first number I should look at every month?

Net profit. It sets the context for everything else.

Final Thought

This isn’t about becoming obsessed with numbers. It’s about ending the constant uncertainty.

When you can finally see what’s working — and what’s quietly bleeding cash — decisions stop feeling scary. They feel grounded.

And that confidence? That’s what healthy businesses are built on.

The 3 Numbers That Finally Answer “Am I Making Money?” for Small Business Owners