Posted on 26 May '15 by , under General News.
Every small business should keep a close watch on the seven basic figures that can help predict business success. Businesses that do not take these numbers into consideration will never be able to progress as quickly as they should.
1. Cash flow
Cash flow gives business’s an overview of the economic state of the business. Small business owners should always make sure they have the necessary cash flow to meet all business expenses.
2. Net income
Just like cash flow, a business’s net profit provides a good indication of whether a business is earning or losing money.
3. Profit and loss
Knowing the profit and loss of a business can assist owners in making realistic short term and long term plans for the future.
Monitoring sales is important, as increases or decreases in sales could be a sign of a changing market. Reacting quickly to changes in sales allows businesses to determine what needs to be done to sustain growth.
5. Price point
Business owners need to know exactly how much it will cost them when purchasing and selling goods in order to make a profit.
6. Gross margin
If a business’s gross margin is low, and not sufficient to cover operating costs, then it’s likely that the business is not charging enough for the products and services.
7. Total inventory
Tracking the business inventory on a regular basis means any problems that arise can be spotted early on, and negative effects can be avoided.