The few numbers a small business actually needs to track

You know your business is busy. You are less sure it is working.

That is the gap this piece is about. You serve customers all day. Money comes in. Money goes out. At the end of the month you have a feeling about how it went, but not a number. And when you try to fix that, one of two things happens.

Either you track nothing, because the day never gives you a quiet moment. Or you go the other way — you download an app, spend a Sunday setting it up, enter three days of data, miss a day, then miss a week, and never open it again.

Both roads end in the same place. You are running on feel.

The fix is not more discipline. The fix is fewer numbers. There is a small set of figures a one-person business can keep by hand, and once you have them, most of your hard decisions answer themselves.

Start with the smallest possible system

Before the numbers, settle the tool. This matters more than you would think, because the tool is what fails first.

Use a notebook. Or one spreadsheet. Not both, and not an app you have to learn.

A ₱40 notebook that you fill in every night beats accounting software you abandoned in a week. The reason is simple: the value of these numbers comes entirely from having a run of them. One good week of data tells you nothing. Twelve weeks of rough data tells you almost everything. Consistency beats precision, every time.

If your handwriting is the fastest thing you own, write. If you are quicker on your phone, use one spreadsheet with one row per day. Pick the one you will actually do on a bad day, not the one that looks most professional on a good day.

There is also a second reason the paper option is not a downgrade, and I will come back to it near the end.

The eight numbers

That is the whole list. Some are daily, some are monthly, one you only work out a few times a year.

1. Daily sales

What it is: Total money that came in from selling, for one day. Before you subtract anything.

How to work it out: Add up everything sold today — cash, GCash, Maya, bank transfer, platform payouts. If a customer took goods on utang, that is still a sale. Record it as a sale and also record it as a receivable (number 7).

How often: Every day, at closing. It takes two minutes if you do it daily and forty-five minutes if you do it weekly, which is exactly why weekly is the one that gets skipped.

What a bad reading tells you: A single slow day means nothing. Look for shape. If Mondays are always thin, that is a stocking and staffing decision, not a crisis. If the 5th to the 12th sags every month while the 15th and 30th spike, you are seeing the payday cycle, and it tells you when to hold cash back. If the whole line drifts down over six weeks, something changed — a competitor, a price you raised, a product you stopped carrying — and you now have a date range to investigate instead of a bad feeling.

Also keep a running total for the year. There is one specific reason, covered further down.

2. Cost of goods

What it is: What the things you sold actually cost you. Not what you spent this month on supplies — what the sold items cost.

How to work it out: For each product, the purchase price per unit, plus anything you must pay to get it sellable and delivered. For a carinderia dish, that is the ingredients per serving plus the packaging. For an online seller, it is the item cost, the packaging, the courier fee you shoulder, and any platform fee taken from your payout. Platform fees are a real cost. Read the current fee schedule inside your own seller app — they change, and only your app shows your actual terms.

How often: Recalculate whenever a supplier price moves. In practice, check your main items monthly.

What a bad reading tells you: If you cannot state the cost of your top-selling item within a few pesos, you do not know whether it is earning or bleeding. Check your bestseller first — that is the item most likely to have been priced years ago and never revisited.

3. Gross margin

What it is: The share of each peso of sales that survives after cost of goods. It is the number that tells you whether your prices work.

How to work it out:

Gross margin = (Sales − Cost of goods) ÷ Sales

Then multiply by 100 for a percentage. Do it per product for your top five items, and once a month across the whole business.

How often: Monthly overall. Per product, whenever a cost changes.

What a bad reading tells you: A thin margin means every peso of sales does very little work for you — you must sell a great deal to cover your fixed costs. It points you at three places to look: your buying price, your selling price, and your product mix. A negative margin on an item means you lose money every time someone buys it, and selling more of it makes things worse, not better.

I will not tell you what a "good" margin is. It varies enormously between a sari-sari store, a carinderia and an online seller, and anyone quoting you one number for all three is guessing. Your margin's job is to be compared against your own margin last quarter, and against your fixed costs — not against a benchmark from the internet.

4. Fixed monthly costs

What it is: What you must pay each month whether you sell nothing or sell out.

How to work it out: List them once. Rent, electricity, water, internet and load, any salary or regular help, permit and licence costs spread across twelve months, loan repayments, delivery subscriptions, equipment maintenance. Add them up.

How often: Write the list once, review it every three months. Costs quietly attach themselves to a business — a subscription here, a service there.

What a bad reading tells you: A fixed cost that has grown while sales stayed flat is the clearest signal in this entire list. It is also the easiest one to act on, because fixed costs are the part of your business you control directly and immediately.

One note on permits and taxes in that list: fees vary by city and municipality, and by your BIR registration type. Confirm your current amounts with your LGU and your BIR Revenue District Office rather than copying what another owner pays.

5. Breakeven point

What it is: How much you have to sell in a month to cover everything. Not to get ahead. Just to be level.

This is the most useful number in the list, and the one that takes an evening to work out rather than a minute. Here it is in full.

This is an illustration with invented figures, to show you the arithmetic. It is not a benchmark, a projection, or anything you should expect.

Say Aling Nena runs a small carinderia. Her fixed monthly costs are:

• Rent: ₱8,000
• Electricity and water: ₱3,500
• Gas and helper: ₱6,500

Total fixed costs: ₱18,000 a month.

She sells meals at an average of ₱75. Her ingredients and packaging cost an average of ₱45 per meal.

Contribution per meal = ₱75 − ₱45 = ₱30.

That ₱30 is what each meal contributes toward her fixed costs.

Breakeven = Fixed costs ÷ Contribution per meal = ₱18,000 ÷ ₱30 = 600 meals a month.

Across roughly 26 selling days, that is about 23 meals a day, every day, before she is level.

Now the part that makes the number worth calculating. Suppose Aling Nena is selling around 18 meals a day — about 468 a month. At ₱30 contribution, that covers ₱14,040 of her ₱18,000. She is short ₱3,960 a month, and she probably feels it as "money is always tight" without knowing why.

She now has three visible levers, and she can test each one:

• Sell more. She needs about five more meals a day. That is a concrete, checkable target, not "get busier."
• Widen the gap per meal. If she can bring ingredient cost from ₱45 to ₱40, contribution becomes ₱35, and breakeven drops to about 515 meals — roughly 20 a day.
• Cut fixed costs. If she gets rent down to ₱6,500, fixed costs fall to ₱16,500 and breakeven at ₱30 contribution drops to 550 meals, about 21 a day.

None of these is a promise. Each is a decision she can now evaluate before she makes it, instead of after. That is the entire point of a breakeven figure: it turns a vague worry into a threshold you can aim at.

How often: Recalculate whenever your rent, your prices, or your main input costs change. For you that is likely two or three times a year.

6. Cash on hand

What it is: What you can actually spend today. Cash in the drawer, cash at home set aside for the business, plus your GCash, Maya and bank balances.

How to work it out: Count it. Weekly is enough. Write the total and the date.

How often: Weekly, same day each week.

What a bad reading tells you: This is the number that catches the problem margin cannot see. A business can be profitable on paper and still fail to pay for stock on Friday, because the profit is sitting in unpaid utang and unsold inventory. If your cash line drops week after week while your sales line holds steady, your money is stuck somewhere — go look at numbers 7 and 8.

It is steadying to keep a cushion of a few months of fixed costs set aside where it is hard to spend. That is my own practical suggestion, not a rule, and how much you can hold depends entirely on your situation.

7. Receivables (utang)

What it is: Money customers owe you. Sales you have made but not been paid for.

How to work it out: One page in the notebook. Name, amount, date it started. Cross it off when paid. Total the page weekly.

How often: Weekly.

What a bad reading tells you: Utang is not automatically bad — it can be what makes you the suki, the store people come back to. It becomes a problem in two ways. First, the total keeps growing, which means you are financing your customers out of your own working capital. Second, individual entries get old. A ₱200 balance from last week is a relationship. The same ₱200 from five months ago is money you have already lost and have not admitted yet.

The dates are what make this page work. Without them, everything looks equally recent.

8. Stock value

What it is: What your unsold inventory cost you. At cost price, not selling price.

How to work it out: Count what you have. Multiply each item by what you paid for it. Add it up. This is tedious and you will not enjoy it. Do it quarterly.

How often: Every three months. Add a quick check of slow items monthly.

What a bad reading tells you: A rising stock value with flat sales means your cash has turned into things on a shelf. Look for the specific items that are not moving — the small handful sitting there for months. For perishables, this number carries an expiry risk too, and old stock does not become good stock by waiting.

Why paper matters beyond your own decisions

Here is the second reason I pushed you toward paper.

First, one thing has to be clear, because mixing these up is expensive. The tracking notebook described above is your own management tool. It is not your books of accounts. If you are registered with BIR, your books of accounts are a separate set, and a manual book has to be registered with BIR before you write in it. Other formats have different registration deadlines — ask your Revenue District Office which applies to you. Keeping a tracking notebook does not satisfy that requirement, however neat it is. They are two different obligations. What they share is only the habit: writing down what happened, on the day it happened, on paper you keep.

With that clear, here is what BIR requires of the registered set.

If you are a BIR-registered business, you are already required to keep books of accounts, and the retention rules are stricter than you might expect. Under Revenue Regulations 17-2013, all taxpayers must preserve their books of accounts, subsidiary books and other accounting records for ten years, counted from the day after the filing deadline (or from the actual filing date, if you filed late) for the taxable year in which the last entry was made.

More to the point for the paper-versus-app question: Revenue Regulations 5-2014 requires you to keep the hardcopy books for the first five years of that period. Only after five years may you keep an electronic copy instead. So a physical, paper book is not a fallback — for the first five years, paper is what BIR expects to be able to see. If a spreadsheet is what you will actually keep up with, keep it. Just ask your Revenue District Office how a spreadsheet-based book has to be registered and kept in hardcopy, because those rules are not the same as the rules for a manual book.

"Other accounting records" is defined to include the invoices, receipts, vouchers, returns and other source documents that support your entries. In plain terms: keep the supplier receipts behind your cost-of-goods figures, not just the summary you wrote down. And RR 17-2013 requires that these books and supporting papers be kept at all times at your place of business, produced immediately on demand for inspection by a revenue officer.

Two more things that are easy to get wrong, both from Revenue Memorandum Circular 3-2023:

• Manual books do not need to be re-registered every year. A new set is registered before it is used — when the pages of the previous book run out. You may choose to start a new set yearly, but you are not required to.
• Registration can now be done online. Books of accounts are registered through BIR's Online Registration and Update System at https://orus.bir.gov.ph, which generates a QR code instead of a manual stamp. RMC 3-2023 also allows registration at your Revenue District Office — ask your RDO which route it is using now. For a new business registrant, manual books must be registered before the deadline for filing your initial quarterly income tax return or your annual income tax return, whichever comes earlier.

Which specific books apply to your business depends on your registration type and size. Ask your Revenue District Office directly — that question has a real answer for your situation, and it is free to ask.

The one reason to track annual sales

There is a practical reason to keep a running yearly total of sales, not just daily figures.

Under Revenue Regulations 8-2024, BIR classifies a Micro Taxpayer as one whose gross sales for a taxable year is less than ₱3,000,000, and a Small Taxpayer as ₱3,000,000 to less than ₱20,000,000. For this classification, gross sales means total sales revenue net of VAT if applicable, with no other deductions — the top-line figure, before your costs.

Separately, the VAT-exempt threshold currently sits at ₱3,000,000. Sales by non-VAT-registered persons whose gross annual sales or receipts do not exceed that amount are VAT-exempt and fall instead under percentage tax. But note this: under the Ease of Paying Taxes Act, that threshold must be re-indexed to present value every three years using the Consumer Price Index published by the PSA. So confirm the current figure with BIR rather than assuming ₱3 million is permanent. The applicable percentage tax rate has also changed over the years — ask BIR what rate is in force for you now.

I am not your accountant and this is not tax advice. The point is narrower and it is practical: your cumulative annual sales figure is what decides which of these categories you fall into, so it is worth knowing where you stand during the year rather than discovering it at filing time.

What to do tonight

Do not build the whole system. Do one thing.

Get a notebook. On the first page, write today's date and today's total sales. Tomorrow, write tomorrow's. Do only that for two weeks — one line a day, nothing else.

At the end of two weeks, add a second column for cost of goods on your top three items. A month after that, sit down on a quiet Sunday and work out your fixed monthly costs and your breakeven number.

If you try to start all eight numbers this week, you will stop by the fifteenth. If you start with one line a night, you will still be doing it next year — and next year is when the pattern in those pages becomes worth reading.