You are the expert in your business, and nobody knows your business better than you. But knowing and understanding your numbers as a business owner can make and break your business, and this is why:
- You can identify where you are leaking money in your business, allowing for you to make changes where needed and to monitor to ensure that money is allocated correctly
- You will get to know your business better; you will find which services or products are doing the best for your business, and you will be able to make expected targets and make adjustments to your margins accordingly
- You will be able to monitor your targets and your margins so you can adjust accordingly to meet your objectives
- You will be able to see where you can reduce your expenses, meaning your profit line will increase without increasing your work
Understanding your numbers can be a daunting task, but it will make you a better business owner and entrepreneur, but your business will be successful for many years.
Here are the main numbers that you should understand in your business to help you achieve the four reasons it will help your business:
- Cash flow – An overview of your operating expenses and income
- Net income – This includes your net earnings and net profit
- Profit and loss – an overview of your income minus expenses for a period of time
- Sales – You should be able to see fluxes in your sales and know when things need amending to keep sales coming in
- Price point – The cost at which you can price things to make a profit
- Gross margin – The difference in price between the price point and the selling price
- Total inventory – The negative cost of your total inventory, including storage and waste
Having a handle on these will set you up to have a successful business and increase your profit margin.
If you need help understanding your numbers, please get in contact to arrange a Know Your Numbers Coaching Session with one of our amazing bookkeepers on the link below: