Book contents · Chapter 4 of 11
If the only full set of numbers is the year-end accounts, the business is steered by feel for most of the year. The fix has two layers: monthly management accounts that close within a few weeks of each month end, and a handful of weekly numbers that tell you between closes whether you are on track.
What are the signs you are running the business without current numbers?
Sound familiar? These are the signs owners describe most often.
- You find out whether last year was good when your accountant tells you.
- You can’t say what your gross margin was last month.
- Price increases and cost cuts happen months after the problem started.
- The bank balance is your main measure of how things are going.
- Your accounts exist for VAT, the tax return and the annual filing, not for decisions.
Why do small businesses only see their numbers at year end?
The books are built for compliance
Most small-business accounts in Malta are prepared to meet obligations: VAT returns, the tax return and the annual financial statements. That work is necessary, but it is produced late and summarised for the authorities, not for the owner.
Bookkeeping runs behind
If invoices are entered in batches before each VAT return, the books are only current four times a year, and only for VAT. Anything else, like margin by job or by customer, is never looked at.
Nobody has chosen the few numbers that matter
Without a short list of numbers that show whether the business is on track, even good data stays in the software. More reports do not help. The right five or ten numbers do.
A cost increase nobody saw
A fictional distributor’s supplier and wage costs creep up in March. The same increase is spotted at two different times.
| Line | Workings | Result | Type |
|---|---|---|---|
| Monthly sales | €80,000 | Actual | |
| Direct costs | €80,000 × 70% | €56,000 | Calculated |
| Supplier and wage costs creep up from March | 3% | Assumption | |
| Margin lost every month | €56,000 × 3% | €1,680 | Calculated |
| Seen in the year-end accounts, prices changed the following June | 13 months × €1,680 | €21,840 | Calculated |
| Seen in April’s monthly accounts, prices changed in May | 2 months × €1,680 | €3,360 | Calculated |
| Cost of finding out at year end | €21,840 − €3,360 | €18,480 | Calculated |
The increase was identical in both cases. Finding it in the year-end accounts instead of the monthly accounts cost about €18,480. Nothing went wrong in the business. The numbers just arrived too late to act on.
Two-minute self-check
Tick the statements that are true for your business today.
How can a small business know where it stands every month?
In Numbers-First Management, these are the parts of the framework that do most of the work on this pain. Each one is explained in Part 2.
Weekly Dials
Ten to fifteen numbers every week, between monthly closes. A slipping margin or a slow month shows up in days, not in next year’s accounts.
Read the Weekly Dials chapter →Year Map
Last year’s actual results chained to this year’s targets, so every month you can see whether you are ahead or behind, and by how much.
Read the Year Map chapter →Money Engine
Shows which jobs, products or customers make the margin, so when a number slips it points straight at the cause.
Read the Money Engine chapter →The example in this chapter was a cost increase nobody saw. With wages and supplier prices rising across Malta, it is one of the most common ways margin quietly disappears.
Chapter 5: Rising costs, flat prices →Is this costing your business?
A free 30-minute call about where your business is and which of these pains matter most. You speak to me, not a call centre.
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