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Know Your Numbers: The Three Financial Metrics Every Creative Business Needs
Dear creatives, let’s talk about money.
More specifically, let’s talk about making more of it, keeping more of it, and understanding what is actually happening after the sale comes in, the invoice gets paid, or the commission check hits your account.
This week, I sat down with Danielle Hayden, a former corporate CFO turned financial guide for creative entrepreneurs and the founder of Kickstart Accounting. Danielle helps business owners understand their numbers without making the process feel cold, confusing, or shame-inducing.
And even though I have a business degree and feel pretty comfortable with accounting, our conversation had me thinking about a lot.
The biggest takeaway was this: knowing your numbers is not meant to make you feel restricted. It gives you a tool that tells you the truth when your brain wants to tell you a story.
That matters because creative businesses come with a lot of stories.
“I had a great sales month, so I must be doing amazing.”
“I’m booked out, so I must be profitable.”
“I’m too small to worry about this yet.”
“I’ll look at the numbers when things slow down.”
Money can feel emotional, especially when your income is tied to work you care deeply about. But when you know what to look at, your numbers become less scary. They become information. They help you make better choices, pay yourself with more confidence, and build a business that can support your life.
Before you listen to the full conversation, here are the three financial metrics Danielle wants every creative business owner to know.
Revenue is the loudest number, but it is not the most useful one
Most of us track revenue first because it is the easiest number to notice.
Revenue is the money that comes in before anything goes out. It is the big top-line number. It is the number we celebrate when we have a good launch, book a large commission, sell out a collection, or hit a monthly sales goal.
And yes, revenue matters.
But revenue does not tell the whole story.
A business can bring in $10,000 in a month and still barely break even. Another business can bring in $5,000 and be in much better shape because its expenses are lower and its pricing is stronger.
That is why Danielle’s first priority is not revenue. It is net income.
Net income is the number left after your business pays its expenses. It is the bottom-line number. It tells you what your business actually kept.
That number matters because it answers the question revenue cannot answer:
Is this business actually profitable?
Revenue can make you feel successful. Net income shows whether the business model is working.
For artists, designers, makers, photographers, writers, and other creative entrepreneurs, this distinction is huge. Supplies, production costs, software, shipping, assistants, studio rent, taxes, transaction fees, debt payments, and your own pay can all eat into that top-line number quickly.
This is why Accounting for Artists should never stop at “How much did I sell?” The better question is, “What did I keep, and what does that allow me to do next?”
The first number to know is your net income
Net income is simple in concept:
Money in minus money out equals net income.
The reality can feel messier because money comes in from different places and goes out in tiny pieces. A subscription here. A materials order there. A payment processor fee you forgot about. A last-minute framing invoice. A helper you paid for a busy week.
Those details add up.
Your net income gives you a clear look at the health of the business after all of that activity settles.
If your net income is strong, you have more room to pay yourself, save for taxes, build a cash cushion, reinvest in the business, or take time off without panic.
If your net income is low or negative, that is not a moral failure. It is information. It may mean your pricing needs to change. It may mean your expenses need attention. It may mean one offer is carrying the business while another is quietly draining it.
The point is not to judge yourself. The point is to see clearly.
Why net income tells the truth
Your brain can build a story from almost any number.
A high-revenue month might make you feel like you can spend freely. A low-sales month might make you feel like everything is falling apart. Neither reaction may be true.
Net income slows that emotional swing.
For example, imagine two months in the same creative business:
Month | Revenue | Expenses | Net income |
March | $12,000 | $9,500 | $2,500 |
April | $7,000 | $3,000 | $4,000 |
March sounds better at first. The revenue is almost twice as high. But April was actually more profitable.
That is the kind of clarity your numbers can give you. They help you see the difference between movement and progress.
How to start tracking net income
You do not need a complicated system to begin. A simple Google Sheet can work beautifully if you use it consistently.
At minimum, track:
Revenue by month
Business expenses by month
Net income by month
Owner pay
Taxes set aside
Debt payments, if you have them
If you want to go one level deeper, separate your expenses into categories like materials, contractors, software, marketing, education, studio costs, shipping, and professional services.
That makes patterns easier to spot.
Maybe your software costs have crept up. Maybe one product line has higher supply costs than you realized. Maybe you are spending more on rush shipping because you are ordering supplies too late.
Those small discoveries are where better decisions begin.
The second number to know is your average monthly operating expenses
The next number Danielle recommends knowing is your average monthly operating expenses.
This is the amount it costs to keep your business running in a regular month, before debt payments and owner pay.
Operating expenses usually include things like:
Studio rent or workspace fees
Software and subscriptions
Materials and supplies
Shipping tools and postage
Contractor or assistant costs
Insurance
Bookkeeping or accounting help
Website fees
Professional development
Equipment repairs
Payment processing fees
This number matters because it tells you how much cash cushion your business actually needs.
Danielle recommends saving one to three months of operating expenses. That way, your business has breathing room if sales slow down, a payment comes in late, or an unexpected expense pops up.
This is one of those places where knowing your numbers can lower stress fast.
A vague savings goal like “I need more money in the bank” is hard to act on. It creates pressure without a target.
A specific goal like “My average monthly operating expenses are $2,400, so one month of cushion is $2,400 and three months is $7,200” gives you a real plan.
Now you know what you are building toward.
Why an average works better than one month
Creative businesses often have uneven expenses.
One month you buy a large batch of materials. Another month you pay for a booth fee, kiln repair, camera lens, annual software subscription, or printer maintenance. If you only look at one month, you might get a distorted view.
An average smooths out those highs and lows.
Look at the last three, six, or twelve months if you have the data. Add up your operating expenses, then divide by the number of months.
For example:
Time period | Total operating expenses | Monthly average |
3 months | $9,000 | $3,000 |
6 months | $15,600 | $2,600 |
12 months | $30,000 | $2,500 |
If your business is seasonal, a longer view may be more helpful. A wedding photographer, holiday maker, muralist, or festival artist may have big swings throughout the year.
The goal is not perfection. The goal is to get close enough that you can make grounded decisions.
The third number to know is your monthly cash outlay
The third number Danielle wants creative business owners to know is monthly cash outlay.
This is the real cost of running your business each month.
It includes:
Operating expenses
Debt payments
What you pay yourself
This number is powerful because it shows what your business needs to generate in cash to keep going month after month.
Operating expenses alone do not tell the whole story. If your business also has a loan payment, a credit card balance, equipment financing, or regular owner pay, those dollars still have to leave the bank account.
Your monthly cash outlay gives you the full picture.
Let’s say your numbers look like this:
Category | Monthly amount |
Operating expenses | $2,800 |
Debt payments | $400 |
Owner pay | $3,000 |
Monthly cash outlay | $6,200 |
That means your business needs $6,200 in available cash each month to cover the way it currently operates.
That does not mean your revenue goal is automatically $6,200. You still need to account for taxes, savings, slow months, reinvestment, and profit goals. But this number gives you a baseline.
It tells you the monthly reality.
Why owner pay belongs in the calculation
This is where many creatives get tripped up.
Owner pay can feel optional, especially if you are used to paying everyone else first and taking whatever is left. But if your business only works when you do not pay yourself, that is important information.
Your pay is part of the business model.
It needs to be included when you look at what the business actually costs to run.
That does not mean you have to pay yourself a perfect salary right away. Many businesses build toward that over time. But you do need to know the gap between what you are paying yourself now and what you need the business to provide.
That gap is not something to ignore. It is a planning tool.
Finances for artists often feel tangled because personal money and business money can overlap. Separating the numbers gives you a clearer view of both.
Your numbers help with decisions, not just reports
The real value of knowing these three numbers is not that you can make a prettier spreadsheet.
The value is that you can make better decisions.
When you know your net income, average monthly operating expenses, and monthly cash outlay, you can answer questions like:
Can I afford to hire help this month?
Do I need to raise my prices?
How much should I keep in my business savings account?
Can I take a slower month without panic?
Is this offer profitable?
How much do I need to sell before I can pay myself?
Can I invest in new equipment or should I wait?
Is my business growing in a healthy way?
This changes the way you lead your business.
Instead of reacting to how your bank account feels on a random Tuesday, you can look at the actual numbers. Instead of making decisions from fear or excitement, you can make them from information.
That does not remove all risk. Business always has some risk. But clarity makes the risk easier to understand.
A simple monthly money check-in
You do not need to look at your numbers every hour. You do not need to become a spreadsheet person if that is not who you are.
But you do need a rhythm.
A monthly money check-in is enough for many creative businesses, especially when you are starting to build the habit.
Here is a simple version:
Record all revenue
Add up every payment that came into the business that month.
Record all expenses
Include subscriptions, supplies, fees, contractor payments, shipping, software, studio costs, and anything else paid by the business.
Calculate net income
Subtract expenses from revenue.
Update your average operating expenses
Add the new month to your tracker and check whether your average changed.
Calculate your monthly cash outlay
Add operating expenses, debt payments, and owner pay.
Look for one pattern
Do not try to fix everything at once. Choose one thing to notice.
Maybe you notice that a service is profitable but exhausting. Maybe you see that a product sells well but costs too much to produce. Maybe your expenses are steady, but your owner pay is inconsistent.
That one pattern can guide your next step.
The numbers are neutral, even when your feelings are not
Money can bring up a lot.
Avoidance. Shame. Pride. Fear. Excitement. Comparison. Confusion.
That is normal. Especially when the thing you sell is tied to your creativity, your identity, and your time.
But the numbers themselves are neutral. They are not judging the quality of your work. They are not deciding your worth. They are not saying you are good or bad at business.
They are showing you what happened.
From there, you get to decide what to do next.
That might mean cutting an expense. It might mean raising a price. It might mean building a cash cushion before making a big investment. It might mean changing your sales goals because you finally understand what the business needs to support you.
You do not have to know everything. You just have to know enough to stop guessing.
A quick note: this post is for general educational purposes and is not personal financial, tax, or legal advice. For decisions specific to your business, talk with a qualified professional.
Start with these three numbers
If you only take one thing from my conversation with Danielle, let it be this: your numbers are not there to scare you. They are there to help you.
Start with these three:
Net income
What your business keeps after expenses.
Average monthly operating expenses
What it usually costs to keep the business running.
Monthly cash outlay
Operating expenses plus debt payments plus what you pay yourself.
Those three numbers will tell you more than revenue ever could on its own.
They will show you whether your business is profitable, how much cushion you need, and what it really costs to run the business month over month.
And once you know that, you can make decisions with a lot more confidence.
Not perfect confidence. Not “I have everything figured out” confidence.
The kind that comes from telling yourself the truth and building from there.
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