2019 planning: 4 key numbers to watch in long-range business planning

November 28, 2018

Sometimes managing your business keeps you so busy it’s hard to tell how you’re really doing. Knowing a few quick tricks for measuring the health of your business can really help you stay on top of the bottom line. Here are 4 key financial numbers to help you stay on top of your long-range business planning.

1. Profit

Keeping track of your business financials is a lot like keeping your own budget, and your Profit and Loss sheet is an excellent tool to help you monitor your long-term financials. Monitoring the profit-and-loss statement helps you figure out longer term trends and helps you make small adjustments that can really boost your profits.

How to Calculate

Total Income – Total Expenses = Profit

What You Can Do With This Info

  • Beyond telling you whether you made or lost money, it can also give you a snapshot of where your money is going. You can scan through the expenses column to see if any expenses are higher than you expected, or if, over time, you are regularly spending more than you anticipated.
  • When reviewed monthly, year-over-year, you’ll be able to see trends and cycles that will help you predict business. For example, does your business typically grow right before Christmas? Is there a slump in the summer? Knowing that will help you plan out how much help you’ll need during seasonal periods.
  • Are you growing enough profit to save for big expenditures you’ll need later? For example, will you have enough to expand your storefront, buy a food truck, or replace a large refrigerator?

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2. Income By Customer

One of the best tools for business owners who use Clover devices is a free app called Clover Insights. This handy app will help you track income by customers, or in other words, how much money each one of your customers spent with you this year.

How to Calculate

Simply take your sales and break it down by customer. If your customers use the same payment method or a loyalty card number, this is relatively easy. It’s even easier if you’re using the Clover Insights app.

What You Can Do With This Info

  • Once you’ve been open a few months, this data will be able to tell you who your most valuable customers are. Use this information to entice these high-spending customers back into your storefront.
  • Reward your most loyal customers to make them into evangelists. Not only will you get more revenue when they come back, they’ll start to talk about you to their friends.
  • Use Insights to learn more about these customers…what demographics do they share? Where else do they shop? Knowing this will help you learn what types of products interest them, which stores might be good to partner with, and where to advertise your business.

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3. Revenue By Product

Which products are your money-makers? Careful…it might not be what you think. While you sell hundreds of banana-bread muffins, it might turn out that bananas have been super expensive lately and you’re actually losing money for every muffin you sell. And maybe you only make $0.50 for every fidget spinner you sell, but you’re making a ton off them because they are the hottest trend this year. It’s good to periodically check on this metric, because it can change over time and challenge some of your deepest assumptions about your business.

How to Calculate

You can calculate this two ways. Either break down your sales by product or look at your inventory numbers. Once you know how many of each product you’re selling per month, you’ll multiply those numbers by the profit you make for every sale. Clover Insights can also help you calculate this with ease.

Average number of products sold x profit per sale = revenue by product

What You Can Do With This Number

  • Decide to start selling products that complement your money-makers. (How about a coffee with that muffin?)
  • Try to upsell your biggest money makers with every sale.
  • Now that you know what’s really bringing in the cash, review your other products to get rid of any that just aren’t making you money. Or, if you think a low-profit product is a real draw and one of the reasons people come to your store, then look for ways to bundle it with others.

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4. Time to Payment

Never lose sight of your cash flow. You want to make sure that money is coming in faster than you are spending it.

How to Calculate

Measure the number of days it takes from the time of purchase to the time the money hits your bank account.

What You Can Do With This Number

  • Time your inventory orders to make sure you have plenty of money in the bank to cover orders.
  • Consider offering promotions during months where you anticipate higher expenses.
  • Don’t like what you see? Change the terms of payment or encourage customers to pay in a preferred format.

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