Many small firms go through the month with a general sense of "doing well" or "doing badly", with no precise reference. Working out the monthly revenue you need — enough to cover fixed costs, borrowing and a minimum margin — turns that feeling into something you can check.
How the figure is arrived at
Adding monthly fixed costs, loan repayments and a minimum acceptable margin gives you a revenue threshold below which the month, in terms of profitability, is not satisfactory — even if the absolute turnover figure looks respectable.
Watch it during the month, not at the end
Comparing, halfway through, the revenue booked so far against half the monthly requirement tells you whether you are on track, ahead or behind — useful for deciding whether to push harder commercially in the weeks remaining, rather than discovering the shortfall once the month is over.
A number that guides commercial decisions
Knowing what you need each month also makes it easier to judge the pipeline concretely: quotes out for less than the month's remaining requirement signal a need to put more proposals in front of people, not simply to wait for answers from existing customers.