Q3 is closing: the five-minute quarterly review
Monthly numbers are noisy. One large invoice, one annual renewal, one slow week and the month tells you a story that is not true. Annual numbers are honest but useless for steering — by the time you see the year, it is over.
A quarter is the useful unit. Long enough that a trend is signal rather than timing, short enough that you still have three more of them to respond. Here is what to look at as one closes.
Six things, in this order
- Revenue against the prior quarter, and against the same quarter last year. Both, because sequential growth flatters a seasonal business and year-over-year hides a recent stall.
- Gross margin, in points. Not dollars. A margin that fell two points on rising revenue is a problem wearing a disguise.
- Operating expenses as a share of revenue. The question is whether costs grew faster than the business did.
- Cash at the start versus the end. Then reconcile the difference to profit. If they diverged, you want to know which of working capital, capex, or debt did it.
- DSO and the A/R aging. Days to get paid drifting out by a week is a quarter-over-quarter trend worth catching now.
- Your one engine metric. Utilization, churn, or conversion — whichever drives your revenue model.
| Q2 | Q3 | Change | |
|---|---|---|---|
| Revenue | $486,000 | $542,000 | +11.5% |
| Gross margin | 39.2% | 37.8% | −1.4 pts |
| Gross profit | $190,500 | $204,900 | +7.6% |
| Operating expenses | $164,000 | $181,000 | +10.4% |
| Operating income | $26,500 | $23,900 | −9.8% |
| DSO | 44 days | 51 days | +7 days |
Separate what you did from what happened to you
For every meaningful movement, ask whether it was a decision or the weather. Margin fell because you discounted to win a large account — that is a decision, and you can evaluate whether it was a good one. Margin fell because a supplier raised prices — that is the weather, and the question becomes whether you pass it on.
The distinction matters because it determines whether the fix is available to you. Businesses waste quarters trying to manage the weather and ignoring the decisions, mostly because nobody separated them.
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The question that makes it a review
End with one question: what will be different next quarter, and who is doing it?
Without that, a quarterly review is a reporting exercise — you look at numbers, agree they are what they are, and carry on. One or two specific changes with a name attached is the entire return on the exercise. If the honest answer is "nothing," that is a legitimate outcome, but say it deliberately rather than by default.
Then write down what you expect to see next quarter as a result. Three months later that prediction is the most useful thing in the room, because it tells you whether you understood your own business or merely described it.
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