How to Conduct a Financial Health Checkup for Your Small Business

Why Your Business Needs a Financial Checkup

Just like our bodies need regular health exams, your business needs financial checkups to stay resilient and thrive. Whether you're a solo hairstylist, dog groomer, or the owner of a small gym, staying on top of your numbers is the best way to ensure smart, sustainable growth.

Key Benefits:

• Catch revenue leaks early
• Know exactly which services or products drive the most profit
• Set realistic, achievable financial goals
• Increase your eligibility for funding

"Don't guess — assess. Clear numbers lead to confident decisions."

5 Vital Signs of Financial Health

1. Revenue Trends

Are you making more each month, or are there seasonal dips? Use 3- to 6-month snapshots to spot trends. Understanding your revenue patterns helps you plan for slower periods and capitalize on peak seasons. For small businesses, even a simple revenue tracking system can reveal powerful insights about your business performance.

2. Profit Margins

Which services make you the most money after expenses? Not all bookings are equally profitable. A proper profit margin analysis can reveal surprising insights - your most popular service might not be your most profitable. Calculate both gross profit margin (revenue minus direct costs) and net profit margin (revenue minus all expenses) for each service line.

3. Cash Flow

Track how much cash is actually in and out of your accounts. Cash flow ≠ profit! Many profitable businesses fail because of poor cash flow management. Create a rolling cash flow forecast that projects both inflows and outflows to ensure you always have operating capital available for essential expenses.

4. Debt Load

Understand your outstanding loans and repayments. Healthy debt supports growth; unhealthy debt slows you down. Calculate your debt-to-income ratio by dividing your monthly debt payments by your monthly revenue. Ideally, keep this below 30% for business sustainability and to maintain eligibility for additional funding when needed.

5. Emergency Reserve

Ideally, keep 1-3 months of operating costs saved for unexpected expenses. Building this financial safety net should be a priority for every small business owner. Even setting aside 5% of monthly revenue adds up quickly and provides peace of mind when equipment breaks down or unexpected opportunities arise.

Step-by-Step: Run Your Financial Checkup

Step 1: Gather Your Data

• Monthly sales
• Expenses (fixed and variable)
• Bank statements
• Loan information

Step 2: Use Our Templates (Free!)

LendGrove's financial tracker helps you calculate your margins, visualize cash flow, and more — without spreadsheets. Our user-friendly templates are specifically designed for small business owners who don't have accounting backgrounds but need accurate financial insights.

Step 3: Analyze

What's working? Where are you losing money? Are your prices aligned with your time and costs? Look for patterns and outliers in your data. Identify your highest margin services and consider how to promote them more effectively. Examine your biggest expense categories for potential cost-saving opportunities.

Step 4: Set SMART Goals

Specific. Measurable. Achievable. Relevant. Time-bound.
Example: "Increase high-margin service bookings by 15% in 90 days."

Financial goals should be connected to specific actions. For each goal, outline the exact steps you'll take to achieve it. Break larger goals into smaller milestones so you can track progress consistently and make adjustments as needed.

Let LendGrove Be Your CFO

We're more than a planning tool — LendGrove helps you:

• Review service offerings with our Service Menu Optimizer
• Set and track goals with our Business Planner
• Understand your numbers with our Financial Health Checkup

Take Action

Sign up for your free financial health checkup and get:

• Customized insights
• Progress tracking
• Confidence in your next step