3 Tips on How Knowing Your Numbers Relates to a Successful Business Model​

What numbers should I measure?

• There aren’t a set of hard and fast rules that apply to all businesses. Knowing the best numbers to measure for your business will be impacted by a few key areas: what industry you are in, how long your business has been operating, and what your growth aspirations are.
• Know the difference between fixed costs and variable costs
• Know your income statement (for business owners), balance sheet (for the bank), and your statement of cash flows (business succeeds and fails here)

Fact: According to U.S. Bank 82% of small businesses fail as a result of cash flow issues

Source: Minute

What’s the most important number in business?​

• Margin is Your Cash Machine
• Sales price – Cost to produce good or service = Gross Margin
• You have to know your numbers – and one of them is your break-even costs
• Your company’s revenue – your company’s expenses = profit or loss

Focus on your operating cash flow, as it is the lifeblood of your business.

How can I grow my business using my data?

• Expanding your existing services/products
• Think about entry into new markets that you had previously not considered
• Look at price increases in small increments. Small increases will result in better margins.

Decreasing the number of days your accounts receivables go unpaid improves your cash flow and your bottom line. You’ll have more cash available to you and will spend less time and labor tracing down late accounts.