For every business, it is important to define key parameters on revenues and costs and these need to be monitored monthly.
Besides looking at profitability for the month, it is also important to look at trends – especially in terms of percentages over the past few months. For example, look at both the gross margin and net margin percentages, and not just the absolute numbers. The goal needs to be to ensure that these percentages also increase, along with the absolute numbers. If in a month, there has been a dip in the percentage, it needs to be investigated closely – because it may lead to a deeper problem with some aspect of the business.
