26Point Checklist

The framework · Business Operations

19 Financial Performance

12 sub-categories. The three numbers on each are the typical opportunity in that area across businesses — not your result.

Time6.2/10Financial9.8/10Automation9.0/10

These three numbers are researched cross-business benchmarks for the area — the typical opportunity available in it. They are not your score, not a forecast, and not a promise. What is actually critical depends on your business, which is what the audit is for.

19.1

Revenue

Time5/10Financial10/10Automation8/10
What this is
Total income, and — more usefully — its composition by product, segment and channel.
Why it matters
Revenue is the headline everyone watches and the least informative number on its own. Its breakdown is where the decisions are.
You have a problem here if
You know this month's revenue but not which third of it produced most of the profit.
What to automate
Automate the split at source by tagging every transaction, then report revenue by dimension monthly. Once revenue is only ever seen as one number, every downstream decision is made blind.
19.2

Revenue growth

Time5/10Financial10/10Automation8/10
What this is
The rate and source of revenue change over time.
Why it matters
Growth from new customers, from price, and from existing customers buying more are three different businesses with three different costs. Aggregate growth hides which one you have.
You have a problem here if
Growth is reported as a percentage with no decomposition.
What to automate
Automate the decomposition — new versus existing, volume versus price — and trend it. This is a straightforward query that changes how growth is understood.
19.3

Gross profit

Time6/10Financial10/10Automation9/10
What this is
Revenue less the direct cost of delivering it, in currency.
Why it matters
Gross profit is what actually funds the business — overheads, growth and the owner. Revenue growth with flat gross profit is work without reward.
You have a problem here if
Revenue is up and the bank balance is not.
What to automate
Ensure cost of sale is correctly classified in the accounting system, then report gross profit monthly and automatically. Misclassified costs are the most common reason this number is wrong.
19.4

Gross margin

Time6/10Financial10/10Automation9/10
What this is
The same figure as a percentage — how much of each dollar of revenue survives delivery.
Why it matters
Margin is the efficiency measure. Two businesses with identical revenue and different margins are not comparable in any way that matters.
You have a problem here if
Margin percentage is unknown, or known only as an annual figure.
What to automate
Automate monthly margin reporting by offering and segment, with alerts when it drifts outside a band. Trend matters more than level: a slowly falling margin is the most common quiet failure in small business.
19.5

Operating expenses

Time9/10Financial10/10Automation10/10
What this is
The cost of running the business independent of delivery volume.
Why it matters
Nine for time, ten for both financial impact and automation. Overheads accumulate by subscription and habit, and almost every business carries spend nobody has questioned in years.
You have a problem here if
You would struggle to list every recurring payment leaving the account.
What to automate
High-value and easy: automated categorisation of all recurring spend, a subscription register, variance alerts against budget, and an annual forced review of every line. This routinely finds real money in the first pass.
19.6

Operating profit

Time6/10Financial10/10Automation9/10
What this is
What is left after overheads — the profit from actually operating.
Why it matters
Operating profit is the honest measure of the business as a machine, before financing and one-offs. It is what a buyer would look at first.
You have a problem here if
Profitability is assessed by how much cash is in the account.
What to automate
Automate monthly management accounts so this number exists within days of month end rather than at year end. Late financial information is the same as no financial information.
19.7

Net profit

Time5/10Financial10/10Automation9/10
What this is
The final result after everything, including tax, interest and one-offs.
Why it matters
Net profit is what the business actually made. It is also what compounds, funds resilience, and determines what the business is worth.
You have a problem here if
Net profit is discovered once a year from the accountant.
What to automate
Automate the reporting pipeline end to end. The value is in frequency: a monthly view lets you correct a bad year in month four instead of learning about it in month fifteen.
19.8

Profit margins

Time6/10Financial10/10Automation9/10
What this is
Margins at every level, tracked over time and against comparable businesses.
Why it matters
Margin trends are the earliest reliable warning of a structural problem — pricing, cost creep or mix shift — and they move long before revenue does.
You have a problem here if
Margins have moved several points over two years and nobody has explained why.
What to automate
Automate the trend view with variance analysis so movements come with an attributable cause rather than requiring an investigation each time.
19.9

Unit economics

Time7/10Financial10/10Automation9/10
What this is
What one unit — a job, a customer, a product — makes or loses.
Why it matters
Unit economics decide whether growth helps or hurts. Scaling a business with negative unit economics accelerates the loss, which is a well-documented way to fail while looking successful.
You have a problem here if
You are confident about total profitability but cannot state profit per job.
What to automate
High automation potential: allocate revenue and cost to the unit automatically and report contribution per unit. Approximate allocation applied consistently is far more useful than perfect allocation never done.
19.10

Return on investment/capital

Time5/10Financial9/10Automation8/10
What this is
What the business returns on the money and assets tied up in it.
Why it matters
Return on capital is what tells you whether the business is worth the investment relative to alternatives — including the owner's own time and money.
You have a problem here if
Investment decisions are made on affordability rather than on return.
What to automate
Automate the tracking of what each investment was expected to return and what it actually returned. Most businesses never close that loop, so the same category of investment gets repeated.
19.11

Financial trends

Time7/10Financial9/10Automation10/10
What this is
The direction and pattern of the financial numbers over time, including seasonality.
Why it matters
Ten out of ten for automation. Single-period figures mislead constantly; trends are where the truth is, and assembling them by hand is exactly the work software should absorb.
You have a problem here if
Financial review consists of comparing this month to last month.
What to automate
Automate rolling twelve-month views, year-on-year comparison and seasonality-adjusted trends. This is a build-once asset that improves every financial conversation thereafter.
19.12

Budget versus actual

Time8/10Financial9/10Automation10/10
What this is
Comparing what you planned to spend and earn against what happened.
Why it matters
Ten out of ten for automation and one of the highest time savers in the category. Variance is what makes a budget a control rather than a wish.
You have a problem here if
A budget exists and is not compared to actuals during the year.
What to automate
Automate the comparison and the exception reporting — only variances beyond a threshold need attention. Setting the budget is judgement; policing it should be automatic.

Category totals

Time 75/120 · Financial 117/120 · Automation 108/120. The sum is the official roll-up; the averages above exist so categories of different sizes can be compared.