What numbers really matter in your business
Understanding the key numbers in your business is crucial for making decisions that drive growth and profitability.
While there are many metrics to track dependant on the type of business you are in, focussing on the top 6 high level numbers for any business can provide you with a clear picture of where you are and how you are tracking.
1. Revenue:
This is the total income generate from sales or services. This is the lifeblood of your business and represents the money coming in.
2. Cost of Sales:
Direct costs associated with your sales. You need to understand your profit margins so that you know that you are pricing your products, services or offerings correctly.
3. Expenses:
These are the costs incurred in running your business that are not directly related to your income-generating activities. These include overheads such as rent, utilities employment costs, bank fees, marketing costs and the like.
4. Net profit:
This is the bottom line of your business. Income less your cost of sales and expenses gives you your net profit. Net profit is a key indicator of the business’s profitability.
5. Total liabilities:
This includes all the monies your business owes to outside parties such as tax, loans, payroll liabilities such as PAYG withholding and superannuation. Managing your liabilities is crucial for maintaining financial stability.
6. Net assets:
Also known as equity. This is the value of your business assets after subtracting its liabilities.
By understanding and regularly monitoring these top 6 high level numbers, you will be in a position to make informed and educated decisions to improve your businesses performance. Whether its increasing revenue, reducing expenses, or managing liabilities knowing your numbers is essential for long-term success.
If you are ready to work with a bookkeeper who can work with you to ensure your top 6 numbers are in order, I would love to have chat!
