Adapted from the June 2026 issue of The Journey, 17hats’ free magazine for small business owners.
Quick answer: Every small business owner should know six numbers by heart — your monthly revenue target, monthly overhead, tax set-aside percentage, profit margin, average project value, and effective hourly rate. Together they tell you whether your business is actually working, not just whether you’re busy. You don’t need an accounting degree to track them; the figures are already sitting in your invoices and bank account.
Most business owners can tell you what they charged their last client. Far fewer can tell you whether that number actually worked for them. That gap is the difference between running your business and just reacting to it.
The good news: you only need six numbers, and you don’t have to tackle all of them at once. Start with the one that feels most unfamiliar — that’s usually the one doing the most quiet damage.
What financial numbers should every small business owner know?
Here are the six, in the order they build on each other:
- Monthly revenue target — the minimum you need to bring in each month
- Monthly overhead — the fixed cost of keeping your doors open
- Tax set-aside percentage — what you reserve from every payment for taxes
- Profit margin — what’s actually left after expenses
- Average project value — what a typical job is worth to you
- Effective hourly rate — what you really earn per hour worked
Let’s walk through each one.
1. Monthly revenue target
Your monthly revenue target is the number your entire business should be built around — and most owners don’t have one.
It isn’t a wish. It’s a calculation. Add up your overhead, your owner’s pay, your savings goal, and your tax set-aside. That total is the minimum your business needs to bring in each month to actually be working.
Without it, every month starts without a finish line. You take clients, send invoices, and hope it adds up. Sometimes it does. Often it doesn’t — and you won’t know until it’s already a problem. Start here, because everything else feeds into this number.
2. Monthly overhead
Before you earn a dollar, your business already owes money. Software subscriptions, insurance, a business phone line, your website, any tools or equipment you maintain — that’s your overhead, the fixed cost of staying open.
Most owners guess this number low. Pull your last three months of business expenses, average them, and separate out anything personal. The real figure is usually higher than you’d think, and knowing it is the only way to tell whether a given project is actually profitable.
3. Tax set-aside percentage
This one is less about strategy and more about not getting blindsided in April.
When you’re self-employed, taxes aren’t withheld automatically. Every payment that hits your account includes money that isn’t yours to spend. A common starting point is setting aside 25–30% of every payment into a separate account before anything else gets touched. A tax professional can give you a more accurate figure based on your income and location.
Treat it like a line item and build it into your pricing. The bill comes whether or not you planned for it.
4. Profit margin
Revenue is what comes in. Profit is what stays. Confusing the two is one of the most common ways a fully booked business still ends up broke.
Your profit margin is what’s left after expenses, as a percentage of revenue:
Profit margin = (Revenue − Expenses) ÷ Revenue × 100
For most service-based businesses, a healthy margin lands somewhere between 20% and 30%, though it varies by industry and cost structure. If yours is lower, the fix might be pricing — but it might also be scope creep, unpaid revision rounds, or overhead you’ve stopped questioning. The number tells you something’s off; you have to dig to find what.
5. Average project value
Take your revenue from the last 12 months and divide it by the number of projects you completed. That’s your average project value.
Pair it with your monthly revenue target and the math gets clear: divide your target by your average project value and you know exactly how many clients you need each month to hit your goal. No more guessing.
Small pricing adjustments, tighter packages, or simply reducing the unpaid extras you’ve been absorbing can each move this number up in ways that compound fast.
6. Effective hourly rate
This is the number most owners are afraid to calculate — and the most useful.
Your effective hourly rate is your actual earnings divided by your actual hours. And “actual hours” means everything: client calls, emails, revisions, admin, prep work. Not just the hours you billed.
For most people, the real number is significantly lower than the rate they think they’re charging. That’s not a reason to panic. It’s a reason to look at where the time is going and decide whether that’s where it should be going. Knowing it makes pricing conversations, scope conversations, and the decision to raise your rates all easier — because you’re not guessing anymore.
How these numbers work together
| Number | What it tells you | Where to find it |
|---|---|---|
| Monthly revenue target | The minimum to stay viable | Overhead + pay + savings + taxes |
| Monthly overhead | Your fixed cost to operate | Last 3 months of expenses |
| Tax set-aside % | What to reserve per payment | ~25–30%, confirm with a pro |
| Profit margin | What actually stays | (Revenue − expenses) ÷ revenue |
| Average project value | What a typical job is worth | 12-month revenue ÷ projects |
| Effective hourly rate | What you really earn per hour | Earnings ÷ all hours worked |
You don’t have to track all six at once. Start with the one that feels most unfamiliar, get comfortable with it, and the others start to make more sense.
Where 17hats can help
If pulling these numbers by hand sounds tedious, your tools can do most of the work. Inside 17hats Bookkeeping, the Client Sales Report calculates your average sale automatically — set a date range and it shows total invoiced, number of invoices, and average sale per client, no spreadsheet required. You can also assign expenses directly to a project, so each job’s page shows a mini profit-and-loss breakdown. That’s a very different conversation than staring at your bank balance and guessing.
The numbers are already in your invoices and accounts. They just need to be pulled out and looked at — and once they are, your decisions get a lot clearer.
Frequently asked questions
What financial numbers should every small business owner know?
Six core numbers: monthly revenue target, monthly overhead, tax set-aside percentage, profit margin, average project value, and effective hourly rate. Together they show whether your business is genuinely profitable, not just busy.
How do I calculate my profit margin?
Subtract expenses from revenue, divide by revenue, and multiply by 100. For example, $80,000 revenue minus $60,000 expenses is $20,000; divided by $80,000 and times 100 gives a 25% margin.
What is a good profit margin for a service business?
A healthy range for most service-based businesses is 20–30%, though it varies by industry and cost structure. A margin below that range is a signal to look at pricing, scope creep, or overhead.
How much should I set aside for taxes as a small business owner?
A common starting point is 25–30% of every payment, moved into a separate account before you spend anything. A tax professional can refine that based on your income and location.
What is an effective hourly rate and why does it matter?
It’s your actual earnings divided by every hour you work — including admin, email, and prep, not just billable time. It usually comes in lower than expected, which makes it one of the most useful numbers for pricing and scope decisions.
This article was adapted from the June 2026 issue of The Journey, 17hats’ free monthly magazine packed with practical business education for small business owners. Read the full issue here.
Want to see your own numbers without the spreadsheet gymnastics? Start a free 7-day trial of 17hats and let your invoices and bookkeeping do the math for you.
