Your Year in Review: 5 Numbers That Reveal the Health of Your Business

As the year winds down, most business owners shift into holiday mode. But before the new calendar kicks off, there's one habit that separates businesses that grow from those that grind: looking at the numbers.

Not just revenue. Not just cash flow. We’re talking about the five metrics that tell the real story about how your business performed and what you need to improve next.

At Tech-Payments, we don’t just set up your payments. We’re partners in helping you run smarter. That includes making sure you know how to track performance and optimize operations, especially if you want to save on merchant fees, streamline tech, or scale in 2026.

Here are five financial metrics you should be reviewing every year and how to actually use them.

1. Net Profit: The Bottom Line That Really Matters

Let’s start with the obvious one. Your net profit isn’t just what’s left over; it’s a reflection of how well your entire system runs.

If revenue is up but profit stayed flat, something’s off. You might be overspending on labor, losing margin to supply costs, or stuck with bloated admin tools.

To calculate:
Net Profit = Total Revenue – Total Expenses

Healthy businesses generally aim for 10–20% net profit margins, depending on the industry. If you’re in auto repair or home services, margins can run tighter, but you should still see consistent year-over-year growth if your operations are dialed in.

Action Tip: Don’t just look at the number, ask why it’s up or down. Then look at the next four numbers to find the story.

2. Material Cost Margin: Are Your Supplies Eating Your Profits?

Especially for retail, auto, or field service businesses, material costs can make or break your year. This margin shows what percentage of your sales go straight to parts, products, or supplies.

To calculate:
Material Cost Margin = (Material Costs ÷ Revenue) × 100

If you’re an auto shop seeing 45–50% material costs, that’s tight but normal. But if it’s climbing over 60%, you need to review vendor pricing, waste, or markup strategy.

Action Tip: Review your top 10 most frequently purchased items. Are there bulk-buying discounts you missed? Can you standardize parts or supplies to lower costs?

3. Labor Cost Margin: Are You Getting the Right Return on Your Team?

Payroll is often your biggest expense, and rightly so. But the key is knowing whether your labor cost margin is working for you or against you.

To calculate:
Labor Cost Margin = (Total Labor Costs ÷ Revenue) × 100

For many small businesses, 25–35% is a solid labor margin, depending on industry and seasonality. But it’s not just about numbers. Are your employees trained to upsell, cross-train, and handle payments efficiently? Are tech systems saving or wasting time?

If you’re paying premium wages but still facing slow turnaround or transaction delays, it might be time to invest in POS training or automation.

Action Tip: Evaluate your tech stack. Can your POS track staff performance or streamline checkouts? If not, we can help.

4. Administrative Cost Margin: Is Your Back Office Bloated?

You didn’t start your business to spend hours managing scheduling software, email platforms, or merchant accounts. Yet many small businesses bleed profit from bloated or duplicated admin tools.

To calculate:
Admin Cost Margin = (Admin/Overhead Costs ÷ Revenue) × 100

This includes software subscriptions, bookkeeping, insurance, office supplies, and anything not tied directly to selling or servicing.

If this number is above 20%, look closer. Are you paying for software you don’t use? Is your payment processor charging hidden monthly fees?

Action Tip: Tech-Payments does free rate reviews and fee audits; we’ll break down your merchant statements line by line, at no cost.

5. Marketing ROI: Are You Investing or Just Spending?

Too many businesses treat marketing like a guessing game. But a clear Marketing ROI can tell you exactly which channels are worth it and which to cut.

To calculate:
Marketing ROI = (Revenue from Campaign  Marketing Cost) ÷ Marketing Cost

For example, if you spent $2,000 on a social media campaign and brought in $6,000 in booked jobs, your ROI is 2.0 (or 200%).

A good marketing ROI varies, but you want to see returns above 2.0. If it’s under 1.0, you’re losing money. Time to pivot or reconsider how you're tracking lead sources.

Action Tip: Use POS data and CRM tools to tag customers by referral source. We can help sync your POS and marketing platforms for better visibility.

Why These Five Numbers Matter Together

Any one of these metrics tells part of the story. But when you review all five side by side, you start seeing patterns and solutions.

High material cost + low profit? Revisit vendor pricing.
Good revenue + poor labor margin? Train smarter or update scheduling.
Flat ROI + high admin costs? Automate outreach, drop old software.

These numbers aren’t about spreadsheets. They’re about clarity. When you understand where your money is going, you get control over where your business is headed.

Let’s Review Your Numbers Together

Most business owners wait until tax season to dig into this stuff, but by then, it’s too late to pivot. At Tech-Payments, we believe in proactive planning, not reactive patching.

If you’re ready to break down your margins, reduce merchant fees, or explore smarter POS options for 2026, we’re here to help.

You Can’t Improve What You Don’t Measure

Numbers don’t lie. They show you what’s working, what’s draining your resources, and what needs attention. This year, take a real look under the hood and start 2026 with clarity, confidence, and control. Schedule an appointment today.

At Tech-Payments, we’re more than a payment processor. We’re your year-round partner for growth, tech support, and honest answers.

Ready to break down your numbers and plan a smarter 2026?